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4. Costs incurred after a. PPE is operating in the manner originally intended by management capitalized. are

4. Costs incurred after a. PPE is operating in the manner originally intended by management capitalized. are

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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4. Costs incurred after a PPE is operating in the manner originally intended by management are capitalized. 5. Costs incurred that are directly attributable to the acquisition of a PPE may be capitalized in full as cost of the asset or allocated in part to normal operations. 6. When the cost of a self-constructed asset is greater than the cost to acquire it from outside sources, the difference is recognized as loss if there is reliable evidence indicating that the cost is materially excessive because of construction inefficiencies or failures. 7. If the fair value of the asset given up in an exchange transaction that has commercial substance is not reliably determinable, the asset received is meassured at its fair value, adjusted for any cash received or paid in the exchange. 8. If a party in an exchange transaction recognizes gain, this presupposes a loss on the part of the other contracting party. 9. PPE acquired by issuing securities are always recognized at the fair value of the securities issued. 10. A PPE acquired from donation is initially recognized at the fair value of the asset given up.
Transcribed Image Text:4. Costs incurred after a PPE is operating in the manner originally intended by management are capitalized. 5. Costs incurred that are directly attributable to the acquisition of a PPE may be capitalized in full as cost of the asset or allocated in part to normal operations. 6. When the cost of a self-constructed asset is greater than the cost to acquire it from outside sources, the difference is recognized as loss if there is reliable evidence indicating that the cost is materially excessive because of construction inefficiencies or failures. 7. If the fair value of the asset given up in an exchange transaction that has commercial substance is not reliably determinable, the asset received is meassured at its fair value, adjusted for any cash received or paid in the exchange. 8. If a party in an exchange transaction recognizes gain, this presupposes a loss on the part of the other contracting party. 9. PPE acquired by issuing securities are always recognized at the fair value of the securities issued. 10. A PPE acquired from donation is initially recognized at the fair value of the asset given up.
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