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MGAB01H3 Lecture : Property

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ochretortoise616
10 Nov 2010
School
UTSC
Department
Financial Accounting
Course
MGAB01H3
Professor
Liang Chen

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MGAB01H3 Full Course Notes
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MGAB01H3 Full Course Notes
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Document Summary

These tangible assets are used in the operation of a business. Determining the cost of property, plant, and equipment. These tangible assets are recorded at historical cost, in accordance with the cost principle. All the cost required to make the capital assets are capitalized (recorded as a capital asset), rather than expensed, because they will provide benefits over future periods. Cost is measured based on the cash paid or cash equivalent. The cash equivalent price is the fair market value of the asset given up. Of, if that value is not clearly determinable, the cash equivalent price is the fair market value of the asset received. Once cost is established, it becomes the basis of accounting for the asset over its. Property, plant and equipment are often subdivided into four classes: land, land improvements, buildings, equipment. Land the cost of land includes the purchase price and other related costs (survey and legal fees).

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Related Questions

Property, plant and equipment (fixed assets) are valued at historical cost, the cost of the asset plus transportation and setup cost. The costs of fixed assets are capitalized based on the company’s capitalization policy (threshold for determining fixed assets) and expensed over time referred to as depreciation expense. Do you think fair market value should be used instead?

On a classified balance sheet, inventory is classified as

a. An intangible asset.

b. Property, plant, and equipment.

c. A current asset.

d. A long-term investment. 

1, The term capitalize means to record an expenditure as an expense. True or False.

2, Cash received from the sale of salvaged materials increase the total recorded cost of the land. T or F

3, Most if the costs associated with internally developed intangible assets are recorded as intangible assets on the balance sheet. T or F

4, Goodwill is recorded as an intangible asset on the balance sheet only when it is purchased as part of the acquisition cost of another company. T or F

5, Book value is equal to the original cost of the asset less the toal balance in accumulated depreciation. T or F

6, Impairment occurs when the future cash flows geerated for a long-term asset fall below its fair value. T or F

7, Circle Co purchased a piece of equipment by paying $10,000 cash. There was a shipping cost of $1,200 and a renovation cost of $3,200 to the building to get the space ready for the installation. There was also an installation cost of $1,000. What should be the recorded cost of this piece of equipment?