Determine a plant assets cost if it is acquired in exchange

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Reference no: EM13872353

Purpose: This case will review the rules for determining a plant asset's cost when the asset is acquired on a deferred payment plan or in a nonmonetary exchange.

A company often acquires property, plant, and equipment by means other than immediate cash payment.

Instructions

(a) Explain how to determine a plant asset's cost if it is acquired on a deferred payment plan.

(b) Explain how to determine a plant asset's cost if it is acquired in exchange for a nonmonetary asset when the transaction has commercial substance.

(c) Explain how to determine a machine's cost if it is acquired in exchange for a similar machine, a small cash payment is made, and the transaction lacks commercial substance.

Reference no: EM13872353

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