PPE-Valuation

Question 1

Should list price be used for valuation of assets?

Answer 1

-No simply a starting point for negotiations

Question 2

What’s the accounting for assets received in donation?

Answer 2

• Record at FMV

- Recognize revenue or gain

Question 3

How do we allocate purchase price of Group Purchases?

Answer 3

-Based on relative FMV’s

Question 4

What are the two Overhead Approaches for constructed assets?

Answer 4

• Incremental Overhead Approach

- Pro Rata Overhead Allocation Approach

Question 5

What’s accounting process when total cost of constructed asset exceeds market value?

Answer 5

-Recognize loss and record at market value