Question

In: Finance

class, access the balance sheet of a publicly traded company, and list what items of assets...

class, access the balance sheet of a publicly traded company, and list what items of assets are reported kn the property, plant, and equipment section on the asset side. pick up one item from the property, plant and equipment, and discuss how you determine the cost of that item to be reported on the balance sheet.

Solutions

Expert Solution

Property, Plant, and Equipment (PP&E) is a non-current, tangible capital asset shown on the balance sheet.
It's include machinery, equipment, vehicles, buildings, land, office equipment,  
land is the only assets that does not depreciate over time.

If a company produces machinery (for sale), that machinery does not classify as property, plant, and equipment. The machinery used to produce the machinery for sales is PP&E, but the machinery manufactured for sale is classified as inventory. The same goes for real estate companies that hold buildings and land under their assets. Their office buildings and land are PP&E, but the houses they sell are inventory.

Property, plant & Equipment Formula:

Net PP&E = Gross PP&E + Capital Expenditures – Accumulated Depreciation

As the above formula shows, Capital Expenditures is additional of plant, and equipment balance in the balance sheet. company spends money investing it's added in plant and equipment.

Above attachment is of balance sheet assets side of HCL technologies Ltd

Net Property, Plant & Equipment= PP&E- Accumulated Depreciation

1,57,794 - 71,988= 85,806

some times fixed assets regularly fixed or replaced to prevent equipment failures, The general rule in accounting for repairs and replacements is that repairs and maintenance work are expensed while replacements of assets are capitalized. Repairs are easy to record; it is simply a debit to repair or maintenance expense and a credit to cash.

For replacements, the old cost of the asset is de-recognized from the company’s books and the cost of the new replacement is recorded/recognized.


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