AFM101 Chapter 9: AFM 101 - Ch. 9

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Donna Psutka

Document Summary

Ch. 9 reporting and interpreting property, plant, and equipment; Classification of long-lived assets: tangible assets (fixed assets) have physical substance. *(beginning + ending balances of ppe (net)) / 2. Measures sales dollars generated by each dollar of fixed asset used. Low could mean they are expanding and acquiring more capital. And too high may mean they"re not renewing equipment . Cost principle requires all costs incurred for a long-lived asset, placing it in its operational setting, and preparing it for use be recorded. Capitalized if recorded as asset instead of expense: ie sales costs, sales taxes, legal fees, transportation, and installation, not discounts though. Capitalized interest: represents interest on borrowed funds directly attributable to construction until the asset is ready for its intended use. Journal entry same as cash acquisition with costs as costs of construction. Basket purchase: an acquisition of 2 or more assets in a single transaction for a single lump sum.