
Judgment Case 1: Property, Plant, and Equipment: Initial Measurement
Bookstores International, a bookstore chain, has been quite successful over the past few decades and is now in expansion mode it typically approaches opening a new bookstore by first determining the general geographic location for a new store and then identifying three to five possible locations within the broader geographic selection. It then hires two consultants: One consultant performs feasibility studies on the three to five locations, and the other consultant develops detailed building plans including an assessment of potential building costs for each of the selected sites. Because the plans for the various sites are not completely independent of each other, the consultant simply charges one fee for the plans for an entire geographic location selection. Based upon the results of the feasibility studies and the predicted building costs, the management of Bookstores International then selects a site and begins the construction process.
Should the fees paid to the consultants be capitalized as part of the new building or should they be expensed? Support your determination with research at ASC 360-10-30 (Property, Plant, and Equipment – Overall-Initial Measurement) and ASC 720-15 (Other Expenses - Start-Up Costs)

Want to see the full answer?
Check out a sample textbook solution
Chapter 11 Solutions
Intermediate Accounting (2nd Edition)
- No chatgpt 7. If inventory is overstated at year-end, which of the following is true?A. Net income is understatedB. Expenses are overstatedC. Net income is overstatedD. Assets are understatedarrow_forward7. If inventory is overstated at year-end, which of the following is true?A. Net income is understatedB. Expenses are overstatedC. Net income is overstatedD. Assets are understatedneed anarrow_forwardNo ai 7. If inventory is overstated at year-end, which of the following is true?A. Net income is understatedB. Expenses are overstatedC. Net income is overstatedD. Assets are understatedarrow_forward
- 7. If inventory is overstated at year-end, which of the following is true?A. Net income is understatedB. Expenses are overstatedC. Net income is overstatedD. Assets are understatedarrow_forwardI mistakenly submitted blurr image please comment i will write values. please dont Solve with incorrect values otherwise unhelpful.arrow_forwardDevelopment costs in preparing the mine $ 3,400,000 Mining equipment 159,600 Construction of various structures on site 77,900 After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $12,000. The structures will be torn down. Geologists estimate that 820,000 tons of ore can be extracted from the mine. After the ore is removed, the land will revert back to the state of New Mexico. The contract with the state requires Hecala to restore the land to its original condition after mining operations are completed in approximately four years. Management has provided the following possible outflows for the restoration costs: Cash Outflow Probability $ 620,000 40% 720,000 30% 820,000 30% Hecala’s credit-adjusted risk-free interest rate is 7%. During 2024, Hecala extracted 122,000 tons of ore from the mine. The company’s fiscal year ends on December 31. Required: Determine the amount at which Hecala will record the mine. Calculate the…arrow_forward
- I mistakenly submitted blurr image please comment i will write values. please dont Solve with incorrect values otherwise unhelpful.arrow_forwardwhat are the Five List of Michael Porter's 5 Force Framework that describes the competitive dynamics of a firm and the industry they are in?arrow_forwardHello tutor i need help I mistakenly submitted blurr image please comment i will write values. please dont Solve with incorrect values otherwise unhelpful.arrow_forward
- define each item below: A competitive advantage. 2) Data incorporation. 3) Financial Statement Analysis. 4) Product Differentiation. 5) Strategic positioning for a business firmarrow_forwardHello tutor i need help I mistakenly submitted blurr image please comment i will write values. please dont Solve with incorrect values otherwise unhelpful.arrow_forwardWhich of the following is true about contra revenue accounts like Sales Returns and Allowances?A. They increase total revenueB. They have a normal credit balanceC. They reduce gross salesD. They increase net income helparrow_forward
- Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning


