会计第五章property,plantandequipment20121125.ppt
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1、Chapter 5 Property, Plant, and Equipment,Li Ming 2013.12,Characteristics of Property, Plant, and Equipment Be held for use and not for investment; Have an expected life of more than one year; Be tangible in nature; do not change their physical characteristics. Idle land or buildings? Goodwill or pat
2、ents?,Determining the Cost of Plant and Equipment,A plant asset as a stream of services to be received by the owner over a period of years. A building as advance purchase of many years supply of housing services. These services are utilized and the cost of the plant asset is transferred into depreci
3、ation expense.,The cost of plant and equipment includes: all expenditures reasonable and necessary in acquiring an asset and placing it in a position and condition for use in the operation of the business. The cash outlay necessary to acquire the asset plus any expenditure for freight, insurance whi
4、le in transit, installation, trial runs, and any other costs necessary to make the asset ready for use.,Interest expense? If plant assets are purchased on the installment plan or by issuance of notes payable, the interest element or carrying charge should be recorded as interest expense and not as p
5、art of the cost of the plant assets. If a company constructs a plant asset for its own use, interest costs incurred during the construction period are viewed as part of the cost of the asset.企业自营建造的固定资产在交付使用前应负担的长期负债利息,应计入自营工程成本,借记“在建工程”,贷记“长期借款”,Fair market value When a stock trades actively, we as
6、sume that the fair market value of the stock is the best indicator of the value of the transaction. E.g. A Corporation sold land to B Company in exchange for shares of B stock. Land Paid-in capital ,The cost of Land includes: purchase price various additional costs: commissions to real estate broker
7、s, escrow fees, legal fees for examining and insuring the title, delinquent taxes paid by the purchaser, and fees for surveying, draining and grading the property. demolition and removal cost less proceeds from salvaged materials FASB requires companies to be conservative and carry land and other lo
8、ng-lived assets at their original historical cost.,Apportionment of a lump-sum purchase buildings are subject to depreciation and land is not. When land and buildings are purchased for a lump sum, the purchase price must be apportioned between land and buildings.,Land Improvements such as driveways,
9、 fences, parking lots, and sprinkler systems Land improvements have a limited life and are subject to depreciation.,Zollett Manufacturing purchased land next to its factory to be used as a parking lot. The expenditures incurred by the company were as follows: purchase price, $600,000; brokers fees,
10、$48,000; title search and other fees, $4,400; demolition of a cottage on the property, $16,000; general grading of property, $8,400; paving parking lots, $80,000; lighting for parking lots, $64,000; and signs for parking lots, $12,800. Determine the amounts that should be debited to the Land account
11、 and the Land Improvements account. Land account: $600,000+$48,000+$4,400+$16,000+ $8,400 Land Improvements: $80,000+$64,000+$12,800,Buildings When a building is purchased, costs include the purchase price, closing costs (attorneys fees, title insurance, etc.) and brokers commission. Costs to make t
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