ADMS 3585 Lecture Notes - Lecture 10: Capital Expenditure, Interest Expense, British Association For Immediate Care
11 Apr 2017
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Chapter 10: property, plant, and equipment: accounting model basics. Also known as tangible capital assets, plant assets, and fixed assets. Examples: land, building, equipment, and natural resource properties. Too much investment in ppe results in costly overcapacity. Both ifrs and aspe require componentization, although ifrs guidance is more detailed. Components of a single asset (e. g. roof of a building) should be recognized separately if they make up a relatively significant portion of the asset"s total cost. Significant professional judgment is required in applying componentization, and other factors to consider include differing useful lives and differing patterns of economic benefits. Capitalized cost of property, plant, and equipment includes all expenditures needed to: Acquire the asset (purchase price, net of discounts and rebates) Bring it to its location and to state where it is ready for use (including delivery, site preparation, installation, assembly, professional fees, etc: discharge obligations associated with asset"s eventual disposal (e. g. site restoration)
