Explain capitalized assets and historical costs

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Problem 1. Businesses must capitalize the cost of assets that are used in the day-to-day operations of the company. These assets are used for extended periods of time, and their capitalized values are shown in the property, plant, and equipment category on the company's balance sheet. The capitalized value of each asset, also known as the historical cost, must be recorded separately. In establishing the historical cost of the asset, all costs and expenses of the asset, until the asset is operational, is used.

Problem 2. You have a meeting with Prahbu at his manufacturing plant to explain capitalized assets and historical costs to him. After the meeting, you want to provide Prahbu a written document about the discussion for his use.

Reference no: EM132967995

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