ACC E272 Lecture Notes - Lecture 12: Book Value
Document Summary
Acquisition, use in operations, end of life for disposal. There are costs subsequent to acquisition while in use of operation. Additions- increase or extension of existing assets. Companies capitalize any addition to plant assets b/c a new asset is created. Improvements- substitution of an improved asset for an existing one. The substitution approach is correct if the carrying amount of the old asset is available. Just remove the old asset and replace it with the cost of the new asset. Capitalize the new cost b/c the asset is already depreciated to 0. Rearrangement and reinstallations- movement of assets from one location to another. Repairs- expenditures that maintain assets in condition for operation. It charges ordinary repairs to an expense account in the period incurred, on the. Major repair- repair that will benefit several periods basis that it"s the primary period benefited. Depreciation must be taken up to the date of disposition. Sale/condemnation--get: cash; give up bv of old ppe- ad.
