ACC 100 Lecture Notes - Lecture 8: Capital Asset, Capital Expenditure
13 Jul 2015
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Assets within ppe (property, plant and equipment) can be tangible or intangible. Tangible: something that is physical (i. e. a machine). Intangible: something that is not physical (i. e. a copyright or patent). Acquisition cost: the amount that includes all costs normally necessary to acquire an asset. If a railway company purchases track or road, they would also need to purchase rolling stock, its information technology and other acquisitory pieces regarding that asset. Items included in acquisition costs generally include purchase price, taxes paid at the time of purchase life (i. e. sales tax), transportation charges and installation costs. Quite often companies purchase assets within a single group purchase using a lump-sum amount. It is important to separately measure these costs because not all are the same. For example, land is a depreciable asset but the amount allocated to its depreciation is subject to the property on the land itself.
