PP&E

Question 1

Initial Measurement General rule

Answer 1

Costs incurred to get the asset in a state of “Ready-to-use” = Capitalized

Costs incurred after the asset is in a state of “Ready-to-use” = Expensed

Question 2

Units of Production depreciation method

Answer 2

(Cost-SV) x Units this year / total estimated units

Question 3

Composite Depreciation

Answer 3

If received cash from salvage company - the net carrying amount of these composite assets would be decreased by the CASH PROCEEDS received

Question 4

Interest to be capitalized on new factory bldg loan

Answer 4

The interest to be capitalized is the lower of the following:
~ Weighted average accumulated expense x interest rate
or
~The actual interest cost incurred

Question 5

Assets are to be recorded at…

Answer 5

Their acquisition cost, which is defined as cash price or its equivalent

Question 6

ARO

Answer 6

Asset Retirement Obligation: legal obligation associated w/ retirement of tangible long-lived asset. Essential part of producing fair and accurate f/s.