Chapter 16

Property, Plant, Equipment, and Depreciation

George I. Victor, CPA

Giambalvo, Stalzer & Company, CPAs, P.C.

16.1 Nature of Property, Plant, and Equipment

(a) Definition

(b) Characteristics

(c) Authoritative Literature

16.2 Cost

(a) Determining Cost

(i) Acquisition by Exchange

(ii) Acquisition by Issuing Debt

(iii) Acquisition by Issuing Stock

(iv) Mixed Acquisition for Lump Sum

(v) Donated Assets

(b) Overhead on Self-Constructed Assets

(c) Interest Capitalization

(d) Cost of Land

(i) Purchase Options

(ii) Interest

(iii) Other Carrying Charges

(e) Cost of Assets Held for Research and Development Activities

16.3 Impairment of Value

(a) Authoritative Pronouncements

(b) Assets to Be Held and Used

(i) Recognition

(ii) Measurement

(c) Assets to Be Disposed Of

16.4 Expenditures During Ownership

(a) Distinguishing Capital Expenditures from Operating Expenditures

(b) Maintenance and Repairs

(i) Accounting Alternatives

(ii) Extraordinary Repairs

(c) Replacements, Improvements, and Additions

(d) Rehabilitation

(e) Rearrangement and Reinstallation

(f) Asbestos Removal or Containment

(g) Costs to Treat Environmental Contamination

16.5 Disposals

(a) Retirements, Sales, and Trade-ins

(b) Casualties

16.6 Asset Retirement Obligations

(a) Initial Recognition and Measurement

(b) Subsequent Recognition and Measurement

16.7 Depreciation

(a) Depreciation Defined

(b) Basic Factors in the Computation of Depreciation

16.8 Service Life

(a) Service Life as Distinguished from Physical Life

(b) ...

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