Chapter 10

CHAPTER 10 Acquisition and Disposition of Property, Plant, and Equipment CHAPTER REVIEW 1.Chapter 10 presents a discussion of the basic business relationship problems associated with the incurrence of costs cogitate to property, lay out, and equipment; and the accounting methods theatrical roled to retire or dispose of these costs. These assets, alike referred to as fixed assets, argon of a durable irritability and include land, building structures, and equipment. Fixed assets are an important part of the operations of most business organizations. They countenance the major essence of support for the production and/or dissemination of a societys product or service. 2.(L.O. 1)?Property, plant, and equipment suffer certain characteristics that contend them from other assets owned by a business enterprise. These characteristics may be expressed as follows: (a) acquired for use in operations and not for resale, (b) long-term in nature and usually depreciated, a nd (c) be in possession of physical substance. An asset must be used in the normal business operations to be classified as a fixed asset. These assets last for a number of old age and their costs must be allocated to the periods which realise from their use. Acquisition of Property, Plant, and Equipment 3.(L.O.

2)?Property, plant and equipment are cheerd in the accounts by most companies at their diachronic cost. Historical cost is measurable by the cash or cash equivalent wrong of obtaining the asset and bringing it to the muddle and condition necessary for its intend use. Thus, charges associated with freight cos ts and inductance are considered a part of ! the assets cost. The play of allocating the historic cost of property, plant, and equipment to the periods benefited by those assets is known as depreciation. The division of depreciation is presented in Chapter 11. 4. incidental to acquisition, companies should not write up property, plant, and equipment to reflect fair value when it is above cost because (a) historical cost...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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