BU387 Chapter Notes - Chapter 10: Retained Earnings, Natural Resource, Impaired Asset
Document Summary
Characteristics of pp&e (1) held for use in the production of goods and services, for rental to others, or for administrative purposes. Recognition: assuming the asset meets definition of ppe, it must also meet the two recognition criteria"s: (1) probable that the items associated future economic benefits will flow to entity (2) the cost can be measured reliably. If costs do not meet this criteria, the cost is expensed ie. repair and ongoing maintenance expenditures. Self-constructed assets: direct costs are easily identifiable and measureable (direct labour, materials, overhead, assign a portion of all overhead to the construction project, assign no fixed overhead to the cost of the constructed asset. ** only capitalize avoidable costs because these directly attribute to the project. Qualifying assets: must require substantial time to get ready for their intended use or sale, may include inventories, items of property, plant or equipment, investment properties or intangibles, capitalize.
