ACCT 3001 Lecture Notes - Lecture 7: The Purchase Price, Promissory Note, Fair Market Value
Document Summary
Property, plant and equipment (ppe) includes land buildings, and equipment (machinery, furniture, tools) Major characteristics include: (cid:862)used i(cid:374) ope(cid:396)atio(cid:374)s(cid:863) a(cid:374)d (cid:374)ot fo(cid:396) (cid:396)esale, long-term in nature and usually depreciated, possess physical substance. Valued at historical cost, reasons include: at acquisition, cost reflects fair value, historical cost is reliable, companies should not anticipate gains and losses but should recognize gains and losses only when the asset is sold. 6 states, (cid:862)p(cid:396)ope(cid:396)t(cid:455), pla(cid:374)t a(cid:374)d e(cid:395)uip(cid:373)e(cid:374)t should (cid:374)ot (cid:271)e (cid:449)(cid:396)itte(cid:374) up to reflect appraisal, market, or current values, which are above cost. Includes all costs to acquire land, and ready it for use. If buildings needed to be torn down for a parking lot to be built, those costs go into the cost of the land not the parking lot. Includes all costs related directly to acquisition or construction. Cost typically include: materials, labor, and overhead costs incurred during construction, professional fees and building permits, excavation costs.
