会计英语11 week 11 PPE Acquisition and Disposition

Chapter10-1Property,Plant,andEquipment:AcquisitionandDispositionProperty,Plant,andEquipment:CostAllocationandImpairmentChapter10-2AcquisitionandDispositionofProperty,Plant,andEquipmentAcquisitionAcquisitioncosts:Land,buildings,equipmentSelf-constructedassetsInterestcostsObservationsValuationCostSubsequenttoAcquisitionDispositionsCashdiscountsDeferredcontractsLump-sumpurchasesStockissuanceNonmonetaryexchangesContributionsOthervaluationmethodsSaleInvoluntaryconversionMiscellaneousproblemsAdditionsImprovementsandreplacementsRearrangementandreinstallationRepairsSummaryChapter10-3“Usedinoperations”andnotforresale.Long-terminnatureandusuallydepreciated.Possessphysicalsubstance.Property,plant,andequipmentincludesland,buildings,andequipment(machinery,furniture,tools).Majorcharacteristicsinclude:Property,Plant,andEquipmentLO1Describeproperty,plant,andequipment.Chapter10-4Atacquisition,costreflectsfairvalue.Historicalcostisreliable.Companiesshouldnotanticipategainsandlossesbutshouldrecognizegainsandlossesonlywhentheassetissold.ValuedatHistoricalCost,reasonsinclude:AcquisitionandValuationofPP&ELO2Identifythecoststoincludeininitialvaluationofproperty,plant,andequipment.Chapter10-5Includesallcoststoacquirelandandreadyitforuse.Coststypicallyinclude:CostofLandAcquisitionandValuationofPP&ELO2Identifythecoststoincludeininitialvaluationofproperty,plant,andequipment.(1)thepurchaseprice;(2)closingcosts,suchastitletotheland,attorney’sfees,andrecordingfees;(3)costsofgrading,filling,draining,andclearing;(4)assumptionofanyliens,mortgages,orencumbrancesontheproperty;and(5)Additionallandimprovementsthathaveanindefinitelife.Chapter10-6Includesallcostsrelateddirectlytoacquisitionorconstruction.Coststypicallyinclude:CostofBuildingsAcquisitionandValuationofPP&ELO2Identifythecoststoincludeininitialvaluationofproperty,plant,andequipment.(1)materials,labor,andoverheadcostsincurredduringconstructionand(2)professionalfeesandbuildingpermits.Chapter10-7Includeallcostsincurredinacquiringtheequipmentandpreparingitforuse.Coststypicallyinclude:CostofEquipmentAcquisitionandValuationofPP&ELO2Identifythecoststoincludeininitialvaluationofproperty,plant,andequipment.(1)purchaseprice,(2)freightandhandlingcharges(3)insuranceontheequipmentwhileintransit,(4)costofspecialfoundationsifrequired,(5)assemblingandinstallationcosts,and(6)costsofconductingtrialruns.Chapter10-8E10-1(AcquisitionCostsofRealty)Thefollowingexpendituresandreceiptsarerelatedtoland,landimprovements,andbuildingsacquiredforuseinabusinessenterprise.Determinehowthefollowingshouldbeclassified:AcquisitionandValuationofPP&E(a)Moneyborrowedtopaybuildingcontractor(b)Paymentforconstructionfromnoteproceeds(c)Costoflandfillandclearing(d)Delinquentrealestatetaxesonpropertyassumed(e)Premiumoninsurancepolicyduringconstruction(f)Refundof1-monthinsurancepremiumbecauseconstructioncompletedearlyClassificationBuildingBuildingLandLandBuilding(Building)LO2Identifythecoststoincludeininitialvaluationofproperty,plant,andequipment.Chapter10-9E10-1(AcquisitionCostsofRealty)Thefollowingexpendituresandreceiptsarerelatedtoland,landimprovements,andbuildingsacquiredforuseinabusinessenterprise.Determinehowthefollowingshouldbeclassified:AcquisitionandValuationofPP&E(g)Architect’sfeeonbuilding(h)Costofrealestatepurchasedasaplantsite(land$200,000andbuilding$50,000)(i)Commissionfeepaidtorealestateagency(j)Installationoffencesaroundproperty(k)Costofrazingandremovingbuilding(l)Proceedsfromsalvageofdemolishedbuilding(m)Costofparkinglotsanddriveways(n)Costoftreesandshrubbery(permanent)Costsof:BuildingLO2Identifythecoststoincludeininitialvaluationofproperty,plant,andequipment.LandLandLandImprovementsLand(Land)LandImprovementsLandChapter10-10Threeapproacheshavebeensuggestedtoaccountfortheinterestincurredinfinancingtheconstruction.InterestCostsDuringConstructionAcquisitionandValuationofPP&ELO4Describetheaccountingproblemsassociatedwithinterestcapitalization.CapitalizenointerestduringconstructionCapitalizeactualcostsincurredduringconstruction(withmodification)CapitalizeallcostsoffundsGAAP$0$?IncreasetoCostofAssetChapter10-11Requireaperiodoftimetogetthemreadyfortheirintendeduse.Twotypesofassets:Assetsunderconstructionforacompany’sownuse.Assetsintendedforsaleorleasethatareconstructedorproducedasdiscreteprojects.QualifyingAssetsAcquisitionandValuationofPP&ELO4Describetheaccountingproblemsassociatedwithinterestcapitalization.Chapter10-12CapitalizationPeriodAcquisitionandValuationofPP&ELO4Describetheaccountingproblemsassociatedwithinterestcapitalization.Beginswhen:1.Expendituresfortheassethavebeenmade.2.Activitiesforreadyingtheassetareinprogress.3.Interestcostsarebeingincurred.Endswhen:Theassetissubstantiallycompleteandreadyforuse.Chapter10-13AmounttoCapitalizeAcquisitionandValuationofPP&ELO4Describetheaccountingproblemsassociatedwithinterestcapitalization.Capitalizethelesserof:1.Actualinterestcosts2.Avoidableinterest-theamountofinterestthatcouldhavebeenavoidedifexpendituresfortheassethadnotbeenmade.Chapter10-14Companiesshouldrecordprope