Chapter 9 - Reporting and analyzing long-lived assets. This chapter include objectives: Determine the cost of property, plant and equipment; explain and calculate depreciation; account for the derecognition of property, plant, and equipment. | 1 CHAPTER 9: Reporting and Analyzing Long-Lived Assets LO 1: Determine the cost of property, plant and equipment. LO 2: Explain and calculate depreciation. LO 3: Account for the derecognition of property, plant, and equipment. LO 4: Identify the basic accounting issues for intangible assets and goodwill. LO 5: Illustrate how long-lived assets are reported in the financial statements. LO 6: Describe the methods for evaluating the use of assets. LEARNING OBJECTIVES Long-lived resources that Are controlled by the company Are tangible (have physical substance) Are used in the operation of a business Are not intended for sale to customers Provide economic benefits over many years Property, Plant, and Equipment Recorded at cost, which includes Purchase price, including non-refundable taxes and duties, less discounts or rebates Expenditures necessary to bring asset to its intended location and make it ready for its intended use Estimated cost of future obligations to dismantle, remove or . | 1 CHAPTER 9: Reporting and Analyzing Long-Lived Assets LO 1: Determine the cost of property, plant and equipment. LO 2: Explain and calculate depreciation. LO 3: Account for the derecognition of property, plant, and equipment. LO 4: Identify the basic accounting issues for intangible assets and goodwill. LO 5: Illustrate how long-lived assets are reported in the financial statements. LO 6: Describe the methods for evaluating the use of assets. LEARNING OBJECTIVES Long-lived resources that Are controlled by the company Are tangible (have physical substance) Are used in the operation of a business Are not intended for sale to customers Provide economic benefits over many years Property, Plant, and Equipment Recorded at cost, which includes Purchase price, including non-refundable taxes and duties, less discounts or rebates Expenditures necessary to bring asset to its intended location and make it ready for its intended use Estimated cost of future obligations to dismantle, remove or restore the asset at the end of its useful life Determining the Cost of Property, Plant and Equipment Operating expenditures Benefit only the current period Immediately charged as an expense Capital expenditures Capitalized as an asset (increases the cost of the asset) Benefit future periods Increases a company’s investment in productive activity Types of Expenditures Cost of land includes Purchase price Closing costs such as title and legal fees Additional costs to prepare land for its intended use (less any proceeds from salvage) Land has an unlimited life, therefore it is not depreciated Land The costs of structural additions made to land (such as paving, fencing, and sidewalks) These decline in service potential over time They are recorded separately from land Depreciated over their useful lives Will not include costs of getting the land ready to use Land Improvements All expenditures related to the purchase or construction of a building When a building is purchased such costs .
