Fixed assets (sometimes referred to as “property, plant, and equipment” or as “plant assets”) are tangible property used in a productive capacity that will benefit the reporting entity for a period longer than one year.
Among the accounting issues that can arise in accounting for fixed assets are
Determination of the amounts at which to initially record the assets, whether acquired through purchase or nonmonetary exchange; or through construction by the reporting entity
Whether management capitalizes discrete assets in groups or separately capitalizes the major individual components of individual assets (unit of account)
The proper accounting for postacquisition costs incurred with respect to the assets during their useful lives
The rate and pattern of allocation of amounts capitalized to the proper periods, including periods during which the assets become impaired
Events that cause the assets to be reclassified as held for sale
The recording of subsequent retirement and/or disposal of the assets at the end of their productive life
Upon acquisition, the reporting entity capitalizes all the costs necessary to deliver the asset to its intended location and prepare it for its productive use. Examples of such costs relative to personal property include
Sales, use, excise, and other taxes imposed on the purchase
Freight costs and related shipping insurance
Storage and handling ...