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    Dead passion's Avatar
    Dead passion Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Mar 4, 2009, 01:01 AM
    Cost of plant asset
    Hello! How are you?

    I've solved a question but I am not sure about the answer...

    What I want to know is that:

    Should we add the materials used in adjusting the machine to produce a satisfactory product, to the cost of plant asset? Knowing that adjesment are normal for this machine and are not are the result of the damages.

    I think we shouldn't add it... Am I right?

    Thank you!
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
    Ultra Member
    		  
    #2

    Mar 4, 2009, 01:53 AM

    To be meaningful the plant assets should
    not be at cost.
    Plant assets and their corresponding
    provision for depreciations should be valued
    based on THE ESTIMATED REPLACEMENT VALUE THEORY.
    I would therefore opt for the inclusion of
    CAPIALISING the expense.
    Professor Ray Chambers of Sydney, Australia has written at length on this subject.
    See also The PHILIPS (Holland) GROUP.
    They have been using this system for the last
    hundred years.

    BOLD STATEMENT :-

    No balance sheet is worth the paper it is printed on unless the cost basis system is
    relinquished.

    rolcam.
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