原帖由 dickyiu 於 2015-4-18 03:45 PM 發表
Expense and Asset differenceHolland Manufacturing Company purchased a new machine. It is clear that the invoice price of the new machine should be capitalized, but the owner is not sure whether the following items should be capitalized (verb form of the term ASSET) or treated as an expense. He also wants to know WHY.
1. The transportation cost to bring the machine from an overseas location to the plant of Holland (“Holland Plant”).
Asset: any costs directly attributable to bringing the asset to the location and conditionnecessary for it to be capable of operating in the manner intended by management should be capitalized as Asset. Since the transportation cost is required to bring the machine from an overseas location to the plant of Holland, it should be treated as an Asset. (HKAS16).
2. The new machine is heavier than the old machine it replaced; consequently, the foundation under the machine has had to be strengthened by the installation of additional steel beams. Should this cost be added to the cost of the building, cost of the machine or be treated as expense.
Asset: any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management should be capitalized as Asset. Since the installation of additional steel beams is required to operate the machine in the manner, it should be treated as an Asset. (HKAS16).
3. The installation of the machine took longer time and was more costly than expected. In addition to time spent by the regular maintenance crew on installation, it became necessary to hire an overseas engineer to assist in the installation to get the machine running properly.
(a) The costs of the overseas engineer include consultant’s fees, air tickets, hotel accommodation, meals and transportation costs from the hotel to the Holland Plant.
(b) Moreover, the Holland plant superintendent and foreman spent a considerable time assisting in the installation work instead of overseeing the production line’s operations.
(c) Before the new machine did not work properly, a large amount of materials were spoiled during trial runs.
(a) & (b) Asset: any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management should be capitalized as Asset.
7 Examples of directly attributable costs are:
(a) costs of employee benefits (as defined in HKAS 19 Employee Benefits) arising directlyfrom the construction or acquisition of the item of property, plant and equipment;
(b) costs of site preparation;
(c) initial delivery and handling costs;
(d) installation and assembly costs;
(e) costs of testing whether the asset is functioning properly, after deducting the netproceeds from selling any items produced while bringing the asset to that location andcondition (such as samples produced when testing equipment);
and(f) professional fees.
How should these costs be treated and why?
4. Holland also paid a state sales tax (levied by the home country of the supplier) on purchasing the machine from an overseas supplier.
Asset: Cost prices of Asset includes purchase price, including import duties and non-refundable purchase taxes, afterdeducting trade discounts and rebates
5. In connection with the payment for the new machine, the overseas supplier was willing to accept Holland Manufacturing Company’s old machine as partial payment. The amount allowed as a trade-in was larger than the book value (unused amount) of the old machine. Should the difference be treated as a gain on disposal of the old machine or a reduction in the cost of the new machine or to be dealt with in some other ways?
gain on disposal of the old machine
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