中南财经政法大学：《中级会计学 Intermediate Accounting》课程电子教案（PPT课件讲稿，英文版）Chapter 8 Property, Plant And Equipment

8 Property, Plant And Equipment ntermediate Accounting Accounting School. Zhongnan

8 Property, Plant And Equipment Accounting School ·Zhongnan University of Economics & Law ntermediate Accounting I 中级会计学

1. Classification as property, plant and equipment To be included in the property, plant, and equipment category an asset must have three characteristics: o The asset must be held for use and not for investment 2 The asset must have an expected life of more than one year 3 The asset must be tangible in nature

Intermediate Accounting 8 Property, Plant And Equipment I. Classification as property, plant and equipment To be included in the property, plant, and equipment category, an asset must have three characteristics:  The asset must be held for use and not for investment.  The asset must have an expected life of more than one year.  The asset must be tangible in nature

rty, Plant And E 2. Acquisition of Property, Plant and Equipment Determination of cost What is the cost of the machine? Devon Company purchases a machine with a contract price of$100,000 on terms of 2/10, n/30 The company does not take the cash discount and incurs transportation costs of $2, 500, as well as installation and testing costs of $3,000. Sales taxes total $5,000 on the purchase. During installation, uninsured damages of $500 are incurred

Intermediate Accounting 8 Property, Plant And Equipment 2. Acquisition of Property, Plant and Equipment Determination of Cost Devon Company purchases a machine with a contract price of $100,000 on terms of 2/10, n/30. The company does not take the cash discount and incurs transportation costs of $2,500, as well as installation and testing costs of $3,000. Sales taxes total $5,000 on the purchase. During installation, uninsured damages of $500 are incurred. What is the cost of the machine?

rty, Plant And E Valuation at Acquisition Cost ofland Contract price Cost of surveys Costs of closing the Clearing and grading transaction, obtaining property to get it ready the title, options, legal for its intended use fees, title search Razing old buildings insurance, past due (net of salvage) taxes

Intermediate Accounting 8 Property, Plant And Equipment Valuation at Acquisition • Contract price • Costs of closing the transaction, obtaining the title, options, legal fees, title search, insurance, past due taxes Cost of Land • Cost of surveys • Clearing and grading property to get it ready for its intended use • Razing old buildings (net of salvage)

Valuation at Acquisition Cost ofland Improvements Landscaping Streets · Sidewalks · Sewers

Intermediate Accounting 8 Property, Plant And Equipment • Landscaping • Streets • Sidewalks • Sewers Cost of Land Improvements Valuation at Acquisition

Valuation at Acquisition Cost of buildings Contract price Remodeling and reconditioning Excavating for the specific building Y Architectural and building permit costs Capitalized interest Certain unanticipated costs

✓ Contract price ✓ Remodeling and reconditioning ✓ Excavating for the specific building ✓ Architectural and building permit costs ✓ Capitalized interest ✓ Certain unanticipated costs Cost of Buildings Intermediate Accounting 8 Property, Plant And Equipment Valuation at Acquisition

Valuation at Acquisition Cost of Equipment √ Purchase price Taxes, freight and insurance during shipping and installation Special foundations or reinforcing of floors √ nstallation and testing

✓ Purchase price ✓ Taxes, freight, and insurance during shipping and installation ✓ Special foundations or reinforcing of floors ✓ Installation and testing Cost of Equipment Intermediate Accounting 8 Property, Plant And Equipment Valuation at Acquisition

Methods of Acquisition Lump-Sum Purchases Allocate cash price to individual assets based on percentage of appraised or fair market value Land, buildings. and equipment are acquired for $160,000. The appraisal values at the acquisition date are: land. $28.000 buildings, $60,000 equipment, $12,000

Lump-Sum Purchases : Allocate cash price to individual assets based on percentage of appraised or fair market value. Land, buildings, and equipment are acquired for $160,000. The appraisal values at the acquisition date are: land, $28,000; buildings, $60,000; equipment, $12,000. Methods of Acquisition Intermediate Accounting 8 Property, Plant And Equipment

Methods of Acquisition Deferred payment. Record asset at face Land is acquired on value of note, plus January 2, 2002 for any cash paid $100,000$35,000 is paid Record note at fair at the time of purchase and market value of the balance is to be paid in acquired asset if semiannual installments of note's value is not $5,000 plus interest on the determinable or is unpaid principal at an annual rate of 10% unreasonable

Deferred payment: Record asset at face value of note, plus any cash paid. Record note at fair market value of acquired asset if note’s value is not determinable or is unreasonable. Land is acquired on January 2, 2002 for $100,0000; $35,000 is paid at the time of purchase, and the balance is to be paid in semiannual installments of $5,000 plus interest on the unpaid principal at an annual rate of 10%. Methods of Acquisition Intermediate Accounting 8 Property, Plant And Equipment

3. Assets Acquired by Exchange of other Assets The general exchange principle is that the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered

3. Assets Acquired by Exchange of Other Assets The general exchange principle is that the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered. Intermediate Accounting 8 Property, Plant And Equipment