Among the principal topics related to the accounting for Property, Plant and Equipment of a company are Acquisition and Retirement.
Required:
(1) Explain the expenditures that a company capitalizes when it acquires equipment for cash.
(2) Assume that a company cannot determine the market value of equipment by reference to a similar purchase for cash. Explain how the company determines the capitalizable cost of equipment purchased by exchanging it for each of the following three items.(a) Bonds having an established market price.(b)Common Stock not having an established market price.(c)Similar equipment having a determinable market value.
(3)Explain the factors that a company uses to determine whether it capitalizes expenditures relating to Property, Plant and Equipment already in use.(4)Explain how a company accounts for the gain or loss on the sale of Property, Plant and Equipment for cash?