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Class - PP&E, also known as plant assets, are important to the operation of any business as you might imagine.

Using the guidance above, consider what assets are needed to run the business and consider how you might actually pay for them?

In the spotlight about FedEx Corporation, you get a feel for the amount of investment in assets and the resulting liabilities that are required to operate a competitive corporation. Even small businesses require plant, property, and equipment to compete and normally rely on some form of debt to finance themselves. Let's start up a company that sells auto parts, like Napa or Auto Zone. What assets would we require? How might we finance them?

what is depreciation? What are the different methods and when would each be appropriate? How do we apply this concept to natural resources? Intangibles?

he unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance of Anderson Production Company follows.

Anderson Production Company

Account	Unadjusted Trial Balance		From the Adjusted Trial Balance
Cash	14,100
Prepaid rent	800
Equipment	42,000
Accumulated depreciation		3,400
Accounts payable		5,100
Salary payable
Unearned service revenue		9,100
Income tax payable
Notes payable, long-term		16,000
Common stock		8,600
Retained earnings		8,500
Dividends	1,400
Service revenue		13,200		19,500
Salary expense	4,300		4,600
Rent expense	1,300		1,600
Depreciation expense			700
Income tax expense			1,500
Total	63,900	63,900	8,400	19,500

Journalize one of the adjusting and one of the closing entries of Anderson Production Company at December 31. Note that there was only one adjustment to Service Revenue.

This is a good exercise to practice recording the cost of plant assets.

Paul

E7-15A Murphy Self Storage purchased land, paying $150,000 cash as a down payment and signing a $180,000 note payable for the balance. Murphy also had to pay delinquent property tax of $2,500, title insurance costing $5,500, and $5,000 to level the land and remove an unwanted building. The company paid $54,000 to add soil for the foundation and then constructed an office building at a cost of $750,000. It also paid $51,000 for a fence around the property, $11,000 for the company sign near the property entrance, and $2,000 for lighting of the grounds. What is the capitalized cost of each of Murphy’s land, land improvements, and building?