#92 Valuation

Question 1

Methods of Acquiring Plant Assets: Issuance of securities

What is the acquisition cost of an asset acquired through the issuance of stocks or bonds?

Answer 1

Either the fair value of the security or the fair value of the asset acquired, whichever can be most clearly determined.

Question 2

Methods of Acquiring Plant Assets: Donated Assets

Donated assets are recorded at what value?

Answer 2

Assets received in donation are recorded at their fair value. A revenue or gain is also recorded.

Question 3

What are the capitalized costs of a self constructed asset?

Answer 3

1. Labor
2. Material
3. Overhead
4. Interest cost incurred during the construction period

Question 4

Capitalization of interest is allowed only when assets are constructed, not purchased.

True or False?

Answer 4

True