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Determination of Cost Carr Company must determine whether the following items are included in property, plant, and equipment: a. contract price b. list price c. freight costs d. discounts taken e. discounts not taken f. installation costs g. testing costs h. cost of major overhaul of equipment i. costs of grading land prior to construction j. tax assessment for street improvements k. delinquent property taxes on acquired property l. cost of tearing down an old building (already owned) in preparation for new construction m. cost of insurance during construction n. avoidable interest costs during construction o. landscaping costs p. severance pay for employees dismissed because of the acquisition of a new machine q. cost of tearing down a building on newly acquired land r. replacement of an electric motor in a machine s. expansion of the heating/cooling system to accommodate an expansion of a building and certain expected future needs t. purchase price of a service contract for 2 years on the acquired asset u. cost of training new employees Required: 1. Indicate which items are included in the cost of property, plant, and equipment and which items are excluded from the cost of property, plant, and equipment. 2. Next Level What is the general rule that should be followed in determining which costs are included in property, plant, and equipment?

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 2E
Textbook Problem

Determination of Cost Carr Company must determine whether the following items are included in property, plant, and equipment:

  1. a. contract price
  2. b. list price
  3. c. freight costs
  4. d. discounts taken
  5. e. discounts not taken
  6. f. installation costs
  7. g. testing costs
  8. h. cost of major overhaul of equipment
  9. i. costs of grading land prior to construction
  10. j. tax assessment for street improvements
  11. k. delinquent property taxes on acquired property
  12. l. cost of tearing down an old building (already owned) in preparation for new construction
  13. m. cost of insurance during construction
  14. n. avoidable interest costs during construction
  15. o. landscaping costs
  16. p. severance pay for employees dismissed because of the acquisition of a new machine
  17. q. cost of tearing down a building on newly acquired land
  18. r. replacement of an electric motor in a machine
  19. s. expansion of the heating/cooling system to accommodate an expansion of a building and certain expected future needs
  20. t. purchase price of a service contract for 2 years on the acquired asset
  21. u. cost of training new employees

Required:

  1. 1. Indicate which items are included in the cost of property, plant, and equipment and which items are excluded from the cost of property, plant, and equipment.
  2. 2. Next Level What is the general rule that should be followed in determining which costs are included in property, plant, and equipment?

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Chapter 10 Solutions

Intermediate Accounting: Reporting And Analysis
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