Valuation at Acquisition Cost of buildings Contract price Remodeling and reconditioning Excavating for the specific building Y Architectural and building permit costs Capitalized interest Certain unanticipated costs
✓ Contract price ✓ Remodeling and reconditioning ✓ Excavating for the specific building ✓ Architectural and building permit costs ✓ Capitalized interest ✓ Certain unanticipated costs Cost of Buildings Intermediate Accounting 8 Property, Plant And Equipment Valuation at Acquisition
Valuation at Acquisition Cost of Equipment √ Purchase price Taxes, freight and insurance during shipping and installation Special foundations or reinforcing of floors √ nstallation and testing
✓ Purchase price ✓ Taxes, freight, and insurance during shipping and installation ✓ Special foundations or reinforcing of floors ✓ Installation and testing Cost of Equipment Intermediate Accounting 8 Property, Plant And Equipment Valuation at Acquisition
Methods of Acquisition Lump-Sum Purchases Allocate cash price to individual assets based on percentage of appraised or fair market value Land, buildings. and equipment are acquired for $160,000. The appraisal values at the acquisition date are: land. $28.000 buildings, $60,000 equipment, $12,000
Lump-Sum Purchases : Allocate cash price to individual assets based on percentage of appraised or fair market value. Land, buildings, and equipment are acquired for $160,000. The appraisal values at the acquisition date are: land, $28,000; buildings, $60,000; equipment, $12,000. Methods of Acquisition Intermediate Accounting 8 Property, Plant And Equipment
Methods of Acquisition Deferred payment. Record asset at face Land is acquired on value of note, plus January 2, 2002 for any cash paid $100,000$35,000 is paid Record note at fair at the time of purchase and market value of the balance is to be paid in acquired asset if semiannual installments of note's value is not $5,000 plus interest on the determinable or is unpaid principal at an annual rate of 10% unreasonable
Deferred payment: Record asset at face value of note, plus any cash paid. Record note at fair market value of acquired asset if note’s value is not determinable or is unreasonable. Land is acquired on January 2, 2002 for $100,0000; $35,000 is paid at the time of purchase, and the balance is to be paid in semiannual installments of $5,000 plus interest on the unpaid principal at an annual rate of 10%. Methods of Acquisition Intermediate Accounting 8 Property, Plant And Equipment
3. Assets Acquired by Exchange of other Assets The general exchange principle is that the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered
3. Assets Acquired by Exchange of Other Assets The general exchange principle is that the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered. Intermediate Accounting 8 Property, Plant And Equipment