Scribd
Upload
15 views

Classes of PPE

The document outlines the classes of Property, Plant, and Equipment (PPE) including land, buildings, machinery, ships, aircraft, motor vehicles, furniture, office equipment, and bearer plants. It details the costs considered for land and buildings, as well as exclusions from PPE classification, emphasizing necessary costs for acquisition and improvements. Additionally, it specifies what costs are included and excluded for equipment, highlighting the importance of initial setup and installation expenses.

Uploaded by

allen legaspi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
15 views

Classes of PPE

The document outlines the classes of Property, Plant, and Equipment (PPE) including land, buildings, machinery, ships, aircraft, motor vehicles, furniture, office equipment, and bearer plants. It details the costs considered for land and buildings, as well as exclusions from PPE classification, emphasizing necessary costs for acquisition and improvements. Additionally, it specifies what costs are included and excluded for equipment, highlighting the importance of initial setup and installation expenses.

Uploaded by

allen legaspi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Classes of PPE:

1. Land
2. Land and Buildings
3. Machinery
4. Ships
5. Aircraft
6. Motor Vehicles
7. Furniture and fixtures
8. Office Equipment
9. Bearer Plants

Cosidered as cost

1. Land
a. Purchase price INCLUDING OTHER NECESSARY COSTS, SUCH AS BROKER’S COMMISSIONS
b. Closing costs such as TITLING COSTS, ATTORNEY’S FEES AND RECORDING FEES
c. Costs incurred in getting the land in the condition for its intended use such as SURVEYING, GRADING,
FILLING, DRAINING, AND CLEARING
d. UNPAID TAXES PRIOR TO DATE OF ACQUISITION ASSUMED BY THE BUYER. Taxes incurred after the
date of acquisition are recognized as expense
e. ASSUMPTION OF ANY LIENS, MORTGAGES, OR ENCUMBRANCES ON THE PROPERTY
f. Special assessments for LOCAL GOVERNMENT-MAINTAINED IMPROVEMENTS such as PAVEMENTS
STREETH LIGHTS SEWERS AND DRAINING SYSTEMS
g. OPTION PAID TO ACQUIRE THE LAND. Option paid on items not acquired are recognized as expense
h. Costs incurred to INDUCE TENANTS TO VACATE PREMISES AND COSTS OF RELOCATING AND
RECONSTRUCTING PROPERTY BELONGING TO OTHERS.
i. INITIAL ESTIMATE OF RESTORATION COSTS FOR WHICH THE ENTITY HAS A PRESENT OBLIGATION
j. Any additional land improvements have an indefinite useful life, such as COSTS OF DRAINING,
CLEARING, GRADING, LEVELING, AND FILLING, SURVEYING, SUBDIVIDING, AND OTHER PERMANENT
IMPROVEMENTS

The ff are not PPE for land:

a. Land SOLD IN THE ORDINARY COURSE OF BUSINESS


b. Land HELD FOR SALE UNDER PFRS 5 – classified as noncurrent asset held for sale
c. Land held for LONG-TERM CAPITAL APPRECIATION
d. Land held for currently UNDETERMINED FUTURE USE
e. Land held as a site for a building BEING CONSTRUCTED OR DEVELOPED FOR FUTURE USE AS
INVESTMENT PROPERTY
f. Land leased out UNDER OPERATING LEASE
g. Land leased out UNDER FINANCE LEASE

Note:

Land Improvement – enhancements to the land which have a definite useful life such as PRIVATE
DRIVEWAYS, WALKS, FENCES, PARKING LOTS, DRAINAGES, AND WATER SYSTEMS, AND COST OF TREES,
SHRUBS, PLANTS AND OTHER LANDSCAPING

2. Building ( Plant )
a. Purchase price INCLUDING OTHER NECESSARY COSTS, SUCH AS BROKER’S COMMISSIONS AND LEGAL
FEES
b. Assumption of any liens, mortgages, or encumbrances on the property
c. Option paid to acquire the building. Options paid on items not acquired are charged to expense
d. UNPAID TAXES PRIOR TO DATE OF ACQUISITION ASSUMED BY THE BUYER. Taxes incurred after the
date of acquisition are recognized as expense
e. Costs incurred to INDUCE TENANTS TO VACATE PREMISES
f. Costs of getting the building in the condition for its intended use such as REMODELING, RENOVATION,
AND OTHER REPAIRS PRIOR TO OCCUPANCY. REPAIR and maintenance costs incurred after occupancy
are recognized as expense

Not part of cost are:

a. Sold in the ordinary course of business


b. Held for sale
c. Being constructured or developed for a future use as investment property
d. Lease out under operating lease
e. Lease out under finance lease

Building improvements:

a. Cost of elevator, escalator, or similar item that was not originally included in the purchased
building or in the blueprint of a self-constructed building
b. Ventilation, plumbing, and lighting systems installed after the occupancy of a purchased building
or other completion of a self-constructed building. If installed prior to occupancy or during
construction, these items are capitalized to the building account.
c. IMMOVABLE FIXTURES attached to the building which if removed, would necessarily damage to
the building e.g. partitions compartments and cranes
3. Equipment
a. Purchase price including other necessary costs such as broker’s commisisons and non-refundable
purchase taxes
b. Freight, handling charges, and insurance on the equipment while in transit
c. Costs of necessary special foundations or platform
d. Assembling and installation costs
e. Costs of testing and conducting trial runs, gross of proceeds from sale of samples produced during
testing
f. The intial estimate of decommissioning and restoration costs for which the entity has a present
obligation

Not included are

a. Costs of relocating the equipment after it has been put to the location and condition originally intended
by management
b. Cost of training personnel who will be responsible in operating the equipment
c. Costs of dismantling and removing old equipment which belongs to the entity prior to the installation of
new equipment

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy