An introduction to asset management cch web manager. Accounting for plant assets final depreciation book value scribd. This chapter examines the accounting treatment prescribed in ias 16for property, plant and equipment and ias 23 which provides for the capitalisation of borrowing costs to qualifying assets. Peace corps ms 711 accounting for property, plant, and equipment page 6 managers at regional recruiting offices rros. Ias 16 property, plant and equipment 2017 07 2 cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when. The amendments will prohibit revenue generated before an asset is available for its intended use from being deducted from the cost of the related property, plant and equipment instead such.
Start studying accounting chapter 10 plant assets, natural resources, and intangibles. Chapter 9 plant assets, natural resources, and intangible. If the proceeds of the sale exceed the book value of the plant asset, a gain on disposal occurs. It should result in an improved awareness by individual staff of. Indicate how plant assets, natural resources, and intangible assets are reported and analyzed plant assets plant assets o tangible resources used in the operations of a business o not intended for sale to customers plant assets are subdivided into four classes. Handling enquiries from staff on matters to do with accounting for property, plant, equipment, and. The term to describe the writeoff of an intangible asset is amortization. In a sale of plant assets, the book value of the asset is compared to the proceeds received from the sale. Such assets are commonly referred to as property, plant and equipment. Harvest is the detachment of produce from a biological asset or the cessation of a biological asset s life processes. Pdf version, 817 pages, free download accounting principles.
Scope ias 16 shall be applied in accounting for property, plant and equipment except for. Chapter 10 plant assets natural resources and intangible assets assignment classification table study objectives questions brief exercises exercises a problems b problems 1 describe how the cost principle applies to plant assets compute periodic depreciation using different methods describe the procedure for revising periodic depreciation. By way of depreciation transfers, this fund group is generally used to accumulate funds for the replacement of equipment. Accounting for property, plant, and equipment federal. Weygandt accounting principles 11e solutions manual ch10. Assets acquired through bulk or aggregate purchases may be grouped into one or more property record units in accordance with the guidance in section 2k of this. If an asset is expected to be entirely consumed within the current period, then it is instead charged to expense in that period. A group of biological assets is an aggregation of similar living animals or plants.
To follow the matching principle, the cost of a plant asset is spread over, or allocated to, the periods in which the asset will be used to produce revenue. Equipment, patents, franchises, buildings, and other longlived assets can be involved. This lesson explains a little more about how depreciation expense is calculated. International accounting standard 16 property, plant and. As explained in chapter 1,the definition and the recognition criteria of property, plant and. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment losses to be recognised in relation to them. Plant assets fulfill the usual criteria for a fixed asset, which means that their initial cost exceeds the capitalization limit of the.
The iasb has issued an ed to propose an amendment to ias 16. Prepare entries for cash and lumpsum purchases of property, plant. Unlike biological assets, property, plant and equipment is not scoped out of ias 36 impairment of assets. Plant assets are used over a number of accounting periods. Chapter 10, accounting for property, plant and equipment. They will probably observe the major new additions, and make a general tour of the. Ifrs bearer plants the new developments requirements. It also shows the other significant events in the life of plant assets. Ias 41 agriculture 2017 07 2 costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income taxes. Accounting for plant assets final free download as word doc. International public sector accounting standard 17, property, plant, and equipment, is set out in paragraphs 1109. Examiner will take account of the quality of language and of the manner in which the answers are presented. Depreciation expense spreads the cost of major equipment and assets over a period of time that spans a number of years.
I am indebted to the people who have generously given their time to edit this document, including paul barnfather, tom elner, madi and deb davis and jo parker. Weygandt intermediate accounting 9e solutions manual ch09. In a business, assets are aggregated into different line items on the balance sheet. Depreciation expense for plant assets financial accounting cpa exam far. Explain the basic issues related to accounting for intangible assets. Examples of assets include property plant and equipment, financial assets. Acquistion and disposition every business enterprise uses assets of a durable nature. Chapter 9 plant and intangible assets skills learning objectives overview of brief. Plant assets, natural resources, and intangible assets after studying this chapter, you should be able to. Depreciation is part of the process for accounting for an asset during its entire life. Learn vocabulary, terms, and more with flashcards, games, and other study tools.
Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use. Ipsas 17 should be read in the context of its objective, the basis for conclusions, the preface to international public sector accounting standards, and. Understand accounting and reporting for leasehold improvement costs. Resources for the renewal and replacement of plant assets as distinguished from additions and improvements to plant. However, in such cases other aspects of the accounting treatment for these assets, including depreciation, are prescribed by this standard. For capital assets located at headquarters, the pah is a designated person in either mas or ocio. What is the difference between assets and plant assets. However, the subsequent calculation of depreciation or amortization provides an added challenge in the. Bearer plants the new requirements 3 entities following either model will need to determine the useful life of the bearer plant in order to depreciate it. Plant assets and intangible assets financial accounting. When the balances of plant asset accounts have been verified in an initial audit, the auditors in subsequent examinations are primarily concerned only with additions and retirements. When there is an exchange of property, plant and equipment, the tradein value of the old asset is usually equal to its fair value at the time of the exchange. Chapter 9 reporting and analyzing longlived assets. Technical release 14 page 3 technical release 14 fasab handbook, version 18 0619 introduction purpose 1.
Pretest youre going to test your accounting knowledge before you begin the module content. In the past, ac 106 and ac 202 dealt specifically with the appropriate accounting treatment for fixed assets. For more information on the institute of asset management, go to. Perhaps using depreciation to give tax relief should be linked to the tax treatment of the asset during its whole life, revaluations, disposals and acquisitions included. Plant assets are a group of assets used in an industrial process, such as a foundry, factory, or workshop. These assets are a subset of the fixed assets classification, which includes such other asset types as vehicles, office equipment, and intangible assets. The useful life will need to be reevaluated each year. Establishes within the department a disposal operation to assist city departments in the. Accounting chapter 10 plant assets, natural resources. Plant assets and the related accumulated depreciation are reported on a companys balance sheet in the noncurrent asset section entitled property, plant and equipment. Explain the accounting for plant asset expenditures. A business perspective first global text edition, volume 2 managerial accounting, revision editor.
Intercompany transfer of depreciable assets accounting. Allocating, or spreading the cost of a plant asset over that asset. Accounting for these transactions resembles that demonstrated for land sales. Understand the nature of depreciation as cost allocation not asset valuation and the.
An asset is something that is expected to yield a benefit in a future period. These assets are tangible in nature and are expected to produce benefits for more than one year. Plant assets in accounting, a plant asset refers to any physical asset with a useful life greater than one year that is actively used in a businesss revenuegenerating operations. Issues a manual containing citywide fixed asset accounting and management procedures and revises the manual as necessary.
Examples of assets that are found on the balance sheet are as follows presented in alphabetical order. If the proceeds of the sale are less than the book value of the plant asset sold, a loss on disposal occurs. Accounting for the disposal of general property, plant and equipment from ffatr, no. Historical cost principle requires that companies record plant assets at cost. A business perspective first global text edition, volume 1 financial accounting, revision editor. Accounting for the disposal of general property, plant and. The principal issues in accounting for property, plant and equipment are the recognition of the assets, the determination of their carrying amounts and the. The accounting for intangible assets and plant assets is much the same. Scope 2 this standard shall be applied in accounting for property, plant and equipment except when another. Allocating, or spreading the cost of a plant asset over that asset s useful life is called depreciation. The iasbs conceptual framework for financial reporting. Introduction to accounting 2 modul 3 plant assets, natural. Plant assets or fixed assets, include land, building structures offices, factories, warehouses equipment machinery, furniture, tools. A gain or loss may be recorded when an asset is retired.
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