John Holtz C Essay

David Holtz C

Joan Holtz (C)

c a s eВ В В В r e g o r t

\

Prepared by

MBAxii G7

Mohamad Nizam Jaafar

Farithal N Sahari

Mizwan Mohamad Shahimin

Mohaini Ahmad Basri

Published to

Doctor Nik Nazli Nik Ahmad

On

18thВ August 2002

STAND OF ITEMS

| CONTENTSВ В | В | В | PAGE NO .

| Subjective of the case| В | В | 3

| В | В | В | В

В 

| Scenario 1: On self-constructed building| В | В | 4| В | Scenario 2: About purchase area and building| В | В | 6| В | Scenario 3: On acquiring a new machine| В | В | 8| В | Scenario four: On leased assets| В | В | 10

| Situation 5: In Income Tax Credit| В | В | 13

| Scenario six: On Changing an Equipment| В | В | 14| В | В | В | В | В

| Queries & Answers| В | В | 16

| В | В | В | В

| Conclusion| В | В | 19

| В | В | В | В

| Bout: | В | В | 20

| В | В | В | В

1| Further Information upon Lease| В | В | my spouse and i

2| Further Information on Exploration & Development Costs| В | В | ii| 3| More information on Bag Purchase| В | В | iii| 4| Backup of First Case Question| В | В | iv

5| Copy of Oral Display Handouts| В | В | v

6| Backup of Common Presentation Slides| В | В | vi

| В | В | В | В

| Main References| В | В | twenty three

ABSTRACT OF THE WATCH CASE

To be or perhaps not to be…that's the question.

To capitalize or expense, that's the main theme of the case. В

Joan asked her mentor on how to decide which expenditure is to be made a fortune, and which usually to be expensed. She asked several scenarios to her teacher. В

Fundamentally, for each scenario given, increased of costs determined depending on: В

1 . В В В В В В Necessity

installment payments on your В В В В В В Future benefits

Nevertheless, issues arise in certain at some situations, such that costs associated with procurment, taxes and R& M. In those cases, a lot of factors or perhaps criteria defined per accounting guidelines as well as standards should be referred. В

However , that to be recognized that all capitalized expenditure will over period is allocated over time in respect to it is usage. This sort of allocation will be in term of: В

depreciation (for tangibles),

demise (for intangibles),

or exhaustion (for organic resources).

SITUATION NO . 1: ON SELF-CONSTRUCTED BUILDING

Short Information

Bruce Manufacturing CompanyВ used its own repair crew to generate additional side to their existing factory and received the followings: В

         Architect fee

         Cost of eliminating snow intended for clearing structure site          Cash discount in construction materials purchased          Cost of development office & tool shed that to be torn down once structure completed          Local real estate income taxes

         Interest upon money borrowed to finance the construction          Cost of blunders during development

         Overhead expense of the maintenance division          Cost of insurance during construction

         Cost of losses/injuries not have the insurance В

Argument For Discussion

Which in turn of the costs are to be made a fortune?

Solution & Analysis

Based on the general guide in IAS 16 (Property, Plant & Equipment), the cost of a do it yourself constructed assetВ В " should contain those costs which associate directly to the particular asset and those that are attributable to the construction activity in general and can be allocated to the particular asset. ” В

EXPENDITURESВ | CAPITALIZED? В | JUSTIFICATIONВ

You Fee| Capitalized| These are almost all ‘one-time costs' incurred in making the place ready for construction therefore, to be capitalized.  |  Snow clearance|  Capitalized|

Cash discount| В Capitalized|

Structure office| В Capitalized|

Real estate property taxes| В Capitalized|

Curiosity on funds borrowed to finance the construction| В В CapitalizedВ | В В According to MASB 27(Borrowing...