Title

A Case of Fixed Asset Accounting: Initial and Subsequent Measurement

Document Type

Article

Language

eng

Format of Original

6 p.

Publication Date

12-2016

Publisher

Elsevier

Source Publication

Journal of Accounting Education

Source ISSN

0748-5751

Abstract

This instructional case integrates multiple accounting concepts relating to fixed asset acquisition and subsequent measurement. You must apply accounting knowledge, professional judgment, and critical thinking skills to evaluate fixed assets and make recommendations. You must also analyze differences between fixed asset accounting under US generally accepted accounting principles and IFRS. As a student, you generally understand basic application of asset cost computation that simply recognizes the amount of cash paid for acquiring the asset. However, determining asset cost becomes challenging when you encounter more complex situations. You must consider initial measurement issues relating to a land purchase (demolition of existing building and a special assessment expenditure), interest capitalization for a self-constructed building, a nonmonetary asset exchange, and an asset retirement obligation. The case also considers subsequent measurement issues in terms of depreciation (straight-line and accelerated methods), replacement of an asset component, and impairment. The case structure is flexible and the teaching notes include alternatives for using scaled-down versions.

Comments

Journal of Accounting Education, Vol. 37 (December 2016): 61-66. DOI.