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MGAB01H3 Full Course Notes
Chapter 9 reporting and analyzing long-lived assets notes. Determining the cost of property, plant, and equipment. Ppe are often subdivided into four classes: land, land improvements, buildings, equipment. Obsolescence is the process by which an asset becomes out of date before it physically wears out. Frequently, lease terms allow party using the asset (lessee) to exchange the asset for a more modern or technologically capable asset if it becomes outdated. This is much easier than trying to sell an obsolete asset. www. notesolution. com: 100% financing. If a company borrows to purchase an asset, it is usually required to make a down payment of at least 20%. Leasing an asset does not require any money down, which helps to conserve cash. In addition, interest payments are often fixed for the term of the lease, unlike other financing which often has a floating interest rate.