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Acquisition Among the principal topics related to the accounting for property, plant, and equipment of a company are acquisition and retirement. Required: 1. Explain the expenditures that a company capitalizes when it acquires equipment for cash. 2. Assume that a company cannot determine the market value of equipment acquired by reference to a similar purchase for cash. Explain how the company determines the cost of equipment purchased by exchanging it for each of the following 3 items: a. Bonds having an established market price. b. Bonds that do not have an established market price. c. Common stock not having an established market price. d. Similar equipment having a determinable market value. 3. Explain the factors that a company uses to determine whether it capitalizes expenditures relating to property, plant, and equipment already in use.

BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 10, Problem 1C
Textbook Problem

Acquisition

Among the principal topics related to the accounting for property, plant, and equipment of a company are acquisition and retirement.

Required:

  1. 1. Explain the expenditures that a company capitalizes when it acquires equipment for cash.
  2. 2. Assume that a company cannot determine the market value of equipment acquired by reference to a similar purchase for cash. Explain how the company determines the cost of equipment purchased by exchanging it for each of the following 3 items:
    1. a. Bonds having an established market price.
    2. b. Bonds that do not have an established market price.
    3. c. Common stock not having an established market price.
    4. d. Similar equipment having a determinable market value.
  3. 3. Explain the factors that a company uses to determine whether it capitalizes expenditures relating to property, plant, and equipment already in use.

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Chapter 10 Solutions

Intermediate Accounting: Reporting And Analysis
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