Management and Organizational Studies 3360A/B Chapter Notes - Chapter 10: Income Statement, Impaired Asset, Issued Shares

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3360A/B
• Professor: Danny Morrison

Document Summary

What elements of cost are capitalized: any costs associated with acquiring and bringing the asset to its location and readying it for use; after this point, capitalization stops, this includes asset retirement costs. It is required that capitalization of avoidable borrowing costs be directly attributable to the cost of acquiring assets that take a substantial period of time to get ready. How are these costs measured: cost is measured by the amount of cash/cash equivalents paid or the fair value of the other consideration given to acquire an asset when it is acquired. Lump sum purchases: to determine portions you can use appraisals for insurance, assessed valuation for property tax, estimates of replacement costs or an independent appraisal. Issuance of shares: fair value of the assets received or shares issued could be used as an indication of the cost of the property acquired if the shares are publicly traded.