Property, Plant, and Equipment

Question 1

What is the definition of P, P, & E?

Answer 1

Tangible items that:

(a) held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used for more than one accounting period.

Question 2

Explain what depreciation is.

Answer 2

the systematic allocation of the depreciable amount of an asset over its useful life

Question 3

Elements of cost accepted for inclusion in the measurement of land cost?

Answer 3

1. Purchase price (including real estate agent commission
2. Cost of obtaining title (including legal fees and searches)
3. Costs of clearing and removing unwanted structures, draining, and landscaping.

Question 4

What items may be included in the measurement of purchased equipment cost?

Answer 4

1. Purchase price including taxes
2. Transportation costs
3. Installation and assembly costs
4. Testing costs
5. Overhauls that extend the useful life or productive abilities.
   NOT TRAINING.

Question 5

What items may be included in the measurement of purchased building cost?

Answer 5

1. Purchase price
2. Renovation and upgrading to make it suitable for intended use.
3. Initial painting and decoration

Question 6

What items may be included in the measurement of self-constructed building cost?

Answer 6

1. Materials cost
2. Labour cost
3. Excavating, engineering, design, and surveying costs
4. Insurance costs WHILE constructing the building
5. Finance costs WHILE constructing the building