Question

Among the crucial events in accounting for property, plant, and equipment are acquisition and disposition.

Required:
a. What expenditures should be capitalized when a company acquires equipment for cash?
b. Assume the market value of equipment acquired is not determinable by reference to a similar purchase for cash.
Describe how the acquiring company should determine the capitalizable cost of equipment for each of the following separate cases when it is acquired in exchange for:
(1) Bonds having an established market price.
(2) Common stock not having an established market price.
(3) Dissimilar equipment having a determinable market value.
c. Describe the factors that determine whether expenditures toward property, plant, and equipment already in use should be capitalized.
d. Describe how to account for the gain or loss on sale of property, plant, and equipment for cash.
e. Discuss the important considerations in analyzing property, plant, and equipment.



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  • CreatedJanuary 22, 2015
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