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Flashcards in Capitalized Cost Deck (5)
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1
Q

What is the general rule for capitalizing expenditures?

A

Capitalize all expenditures necessary to bring the plant asset to its intended condition and location

2
Q

What are the considerations that must be given when electing to expense or capitalize an item?

A
  1. )Estimated time benefit;

2. )Materiality.

3
Q

List the components of capitalized costs of self-constructed assets

A
  1. )Labor;
  2. ) Material;
  3. ) Overhead;
  4. ) Interest Cost
4
Q

Define “get ready costs”.

A

All costs incurred to get the asset on the company’s premises and ready for use. Ex. The setting up and testing of new machinery

5
Q

List the general rules on costs to capitalize.

A
  1. ) Cash equivalent price or negotiated acquisition cost

2. ) Get ready costs

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