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What are plant assets and how does a business measure the cost of a plant asset?...

What are plant assets and how does a business measure the cost of a plant asset?

Discuss some of the individual costs that may be included in the overall cost of a plant asset.

Solutions

Expert Solution

Answer:Plant asset refers to long term tangible asset that the company owns and is used to produce goods and services for the company and generate income.

Some of the features of plant assets are given below-

  • Plant asset is also called property, plant and equipment.
  • It is not intended to be sold within a year. Hence it is long term assets.
  • Plant assets are tangible in nature
  • Plant assets gives long term benefit to the company .That is the reason they are capitalized in the books and cost of asset is allocated over the useful life of asset.

The cost of plant asset is measured and initially recognized at cost. The cost here includes all costs necessary to bring the assets to working condition for its intended use. The cost includes Purchase price, cost of installation, delivery and handling, professional and consultancy fees etc.

Part 2 answer.

Individual cost to be included are given below-

  • Installation cost
  • Professional fee
  • Delivery fee

ekkarill92 answered 1 year ago
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