Accounting Chapter 10

Chapter 10

Discuss capitalization vs. expensing of be:

Capitalization-The initial address of plant, property, and equipment and nonphysical pluss includes the purchase price and any expenditures necessary to bring the asset to its desired condition and location for lend oneself.
Items that are capitalized:

Initial personify of Equipment- Each expenditures personad to bring the equipment to its condition and location for use and should be capitalized and then expensed in future periods after the asset is used. (Purchase price + Freight and handling + Insurance during shipping + circumscribed foundation + Trial runs)

represent of arrive-Expenditures needed to get land started. These include the purchase price plus closing follows such as fees for the attorney, real estate agent commission, surname and title search, and recording.

Land Improvements-The costs of land improvements are capitalized and depreciated.

Cost of Building-Cost of acquiring a building

Cost of Natural Resources- The cost of a natural resource includes the acquisition costs for the use of land, the exploration and development cots incurred before production begins, and restoration cots incurred during or at the end of extraction.

Asset Retirement Obligations- This is a metrical at fair appreciate and is recognized as a liability and corresponding increase in asset valuation.





Expensing Costs-Referes to all costs that are incurred from continuing operations

Determine the capitalized cost of an asset
-What if you pay cash?
-What if you have a deferred payment?
-What if you keep a lump-sum purchase?
-Talk about goodwill
-Dispose of assets

Exchange nonmonetary assets (10-11A&B)
How does fair range come into the equation?

Fair value is used when an spot has mercantile value.

What if you cant determine fair value?

If you cant determine the fair value than you take the book value.

What is commercial substance and how does it affect your journal entries?

Commercial...If you want to get a full essay, order it on our website: Ordercustompaper.com



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