F3- M4 PPE Cost basis Flashcards
What is included in land
Demo, raize, legal fee, insurances, minus salvage value or proceeds real estate taxes in arrear. DO NOT include debt issuance cost. (Dont confuse land account and land improvement)
How are assets valued that have payments for over a year
Valued at the PV of future payments
What do you capitalize? How are repairs treated? What about additions and improvements that reduce cost?
All cost needed to put asset into place or that improves quality or efficiency (such as land improvements or inventory improvements) ordinary repairs are expensed as occurred. You are not allowed to capitalize inventory unless it is a special order. Additions and improvements that reduce cost can also be capitalized.
When does the capitalize period start?
When it meets the following criteria 1) permits filed 2) expenditures made 3) interest occurred. It ends when building is ready for use. Delays in permits are considered normal you can capitalize .
When life of an asset has been extended what is capitalized
The lessor of original life and new life
What is the assigned value from an appraised acquisition
Percentage of price paid for the asset
