Chap 8- PPE

School: University of British Columbia - Course: COMM 353 353 - Subject: Accounting

PROPERTY, PLANT , AND EQUIPMENT Investorsdon'tderail • Pcbsbhhy - Vtlhe room forbras muchPPE into• phgsral Assets→ easy to audit Inbalrecognition1whatCosts can be upheld 2Root of lgokhzehrm 2 How should therecostsbecategorized 4. Spark campus - feltconstruction costs/ Replacement vi.repens/ site restorationcosts coststoCophdre IFRS: captureallcosts regard to acquire or to constructthe asset at pgn-E-u.se . - Ex : LAND purchasecost, theheels ,legalfees, property transfer tugdoolhas BUILDINGpurlinhost ,constructor pooh, architectural design, constructioncosts EQUIPMENTpardoncost,sales tunes, transportation art debut , installation , brawny PERIODOF→Capitalizationendswhen theassetis readyfor it 's intended UR CAPITALIZATION(assetdoesn't here to beMI pet ) CATEGORIZING COSTSBulletpunters: buyseveral frockassets together ISSUES: 2.Needtoestimate forvalueof each assetpurchased 2.Total for value can drawfrom purchase pre → Allocate fourvalues proportionally METI/ ÷:÷÷¥:÷ ( " " " " ¥8s Building 5400° 50%401000 go.oooao.si Forklifts 2500° 25% 20,000 80,000×0.25 Total I 100,000100% I 80,000 Dr Land 20,000 prBuilding 40,000 DrForklifts CrCash • '°O° 80,000

SPECIFIC EXAMPLES : SELF - CONSTRUCTION Self -Constructorcosts → Sometimescompares build the own PPE Bo : Jan 31Purchaseof land andbuttery 460,000LAND Feb19Costof removing entrybuilding7,000 LAND MarISproceedsfromSalaof scrap retardfromdemolition (1,800) LAND Marls partial payment on new construction89000 BUILDING MarISlegalfeespud(1800legalvoteforunstructured 3,200 MIX Apr%Secondpayment on new constructor80000 BUILDING 5,000 LAND Jun20Specialtasassessment(repair street ) Improvement Jul3General expenses (4000supowsm of buddy ? 38,000 MIX Dec 31 Finalpoorest on new constructor 68000BUILDING pec 31lessdcpcootnnfor208 Cg%?z%- EXPENSE - esbmkt ischlthe __40 prs decking- bebnee method= 5% rate constructioncostssooooo Buttry wasn't pit inuse NOTE :Constructorcosts89000 withJuly1 → 6 months it borrowing costconstructor costs65,000 directlyattrrhkbh to legal fees 1,500 a construction → captainSuperintendentsalary 4,000 Total ✗ 61m months ✗ s%= 5262.50 CORRECT DEPRECIATION