At what value should the following be recorded? Acquisition of a plant asset for cash. Acquisition...
At what value should the following be recorded?
- Acquisition of a plant asset for cash.
- Acquisition of a plant asset in exchange for stock.
- Exchanging plant asset(s) for other plant asset(s).
- Donation of a plant asset.
Homework Answers
1. Acquisition of Plant Asset for cash :
Answer : All assets acquired to be recorded at landed cost which means cost at the time of acquisition plus all other costs related to bringing the asset to use.
Hence the Asset cost would be recorded at cost including all costs till the time assets is brought into factory and put to use.
2. Acquisition of plant asset in exchange for stock would be recorded at the price at which the stocks were issued.
Generally stocks are issued at par or at premium or at discount.
Hence the asset recording value will be done accordingly.
3. This is called at trade-in-value and the asset would be recorded
at the traded price. that is the price at which the new asset is purchased.
4. Donation of plant asset is recorded at its written down value after depreciation.
If we are donating an asset which is fully written down and showing NIL book value and if we are donating a partially written down value asset.
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At what value should the following be recorded?
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