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Intermediate Accounting: Reporting...

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

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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What characteristics are necessary for a company to include an asset in the category of property, plant, and equipment?

To determine

Identify the characteristics that are required for a company to include an asset in the category of property, plant and equipment.

Explanation

Property, Plant, and Equipment:

“Property, Plant, and Equipment” refers to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

Asset must have the following characteristics, to be included as property, plant and equipment:

  • “The expected life of an asset must be more than one year”.
  • “The asset should be used in operations and not for investment purpose”.
  • “The asset should be tangible in nature”.

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