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Assignment
Required:
a. What expenditures should be capitalized when equipment is acquired for cash?
b. Assume the market value of equipment is not determinable by reference to a similar purchase for cash. Describe how the acquiring company should determine the capitalized cost of equipment purchased by exchanging it for each of the following: i. Bonds having an established market price ii. Common stock not having an established market price iii. Similar equipment not having a determinable market price
c. Describe the factors that determine whether expenditures relating to property, plant, and equipment already in use should be capitalized.
d. Describe how to account for the gain or loss on the sale of property, plant, or equipment.
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