BU387 Chapter Notes - Chapter 10: Deferral, Sewage Treatment, Impaired Asset
Document Summary
Pp&e are assets that are held for use in the producion of goods and services (or rental purposes), they are used over one or more accouning periods, and they are tangible. If these are both met, the item is capitalized (included in the asset"s cost) and recognized as a pp&e asset. If both criteria are not met, the costs incurred are recognized as an expense, such as when repair and ongoing maintenance expenditures are made. Generally, the cost of an item of pp&e include all expenditures needed to acquire the asset and bring it to its locaion and ready it for use. Self-constructed asset assets constructed by the company. Suter corp purchases a robot and issues a ,000, ive-year, non-interest-bearing note to wrigley for the new equipment (prevailing market interest rate is 10%). Suter is to pay of the note in ive ,000 instalments made at the end of each year. Pv = 20,000(pvifa 5, 10%) = 20,000(3. 79079) = ,816.
