Plant Assets Aquisition, Disposition
TABLE OF CONTENTS
1) Introduction
2) Plant Assets
3) Cost Subsequent to Acquisition
4) Valuation
5) Disposal of Plant Assets
6) Intangible Assets
7) Financial Reporting for Plant Assets
8) Conclusion
9) Bibliography and References
1) Introduction
This paper includes, to the best of my knowledge and research, information pertaining the acquisition and disposal of plant assets. This includes terms, examples, descriptions and general accepted accounting principles necessary to explain the topic in reference. 2) Plant Assets Acquisition
The term property, plant and equipment, also called fixed assets, includes all tangible assets with a service life of more than one year that are used in the operation of the business and are not acquired for the purpose of resale. This includes equipment, furniture, tools, machinery, buildings and land. These assets are expected to provide services to the company for a number of years. Except for land, plant assets decline in value over their useful lives. Plant assets are usually subject to depreciation. Depreciation methods are not covered in detail in this paper. The book value of plant assets is the cost of the asset less accumulated depreciation. This amount is not an indication of the market value of the asset, which may be much higher than the book value in most cases. The difference between the market and book value of assets is an unrecorded asset. Also I’m going to include in this paper intangible assets that in some cases have more material significance than plant assets in the financial statements. 3) Cost Subsequent to Acquisition
The cost principle requires that companies record plant assets at historical cost. APB Opinion No. 6 states that property, plant and equipment should not be written up to reflect appraisal, market or current values which are above cost. Cost consists of all expenditures necessary to acquire an asset and make it ready for its intended use. Examples are: purchase
1) Introduction
2) Plant Assets
3) Cost Subsequent to Acquisition
4) Valuation
5) Disposal of Plant Assets
6) Intangible Assets
7) Financial Reporting for Plant Assets
8) Conclusion
9) Bibliography and References
1) Introduction
This paper includes, to the best of my knowledge and research, information pertaining the acquisition and disposal of plant assets. This includes terms, examples, descriptions and general accepted accounting principles necessary to explain the topic in reference. 2) Plant Assets Acquisition
The term property, plant and equipment, also called fixed assets, includes all tangible assets with a service life of more than one year that are used in the operation of the business and are not acquired for the purpose of resale. This includes equipment, furniture, tools, machinery, buildings and land. These assets are expected to provide services to the company for a number of years. Except for land, plant assets decline in value over their useful lives. Plant assets are usually subject to depreciation. Depreciation methods are not covered in detail in this paper. The book value of plant assets is the cost of the asset less accumulated depreciation. This amount is not an indication of the market value of the asset, which may be much higher than the book value in most cases. The difference between the market and book value of assets is an unrecorded asset. Also I’m going to include in this paper intangible assets that in some cases have more material significance than plant assets in the financial statements. 3) Cost Subsequent to Acquisition
The cost principle requires that companies record plant assets at historical cost. APB Opinion No. 6 states that property, plant and equipment should not be written up to reflect appraisal, market or current values which are above cost. Cost consists of all expenditures necessary to acquire an asset and make it ready for its intended use. Examples are: purchase
References: Ingram, Robert W., Albright, Thomas L., Baldwin, Bruce A., Hill, John W. (2000). Accounting Information for Decisions. 1st Edition. South Western. Kimmel, Weygandt, Kieso Warren, Carl S. (2007). Survey of Accounting. 4th Edition. South Western Whittington, Ray O., Pany, Kurt., Meigs Walter B