Fixed assets

Fixed assets 

Fixed assets : It represents the capitalized amount of expenditures made to acquire tangible property which will be used for a period of more than one year , tangible property includes  land , buildings , equipment , assets , received through donation should be recorded at F.M.V with a corresponding credit revenue ; if F.M.V is not determined book value should be used .

1- Property, plant, equipment:

General Rules:

- Capitalized amount = cost of Assets
                                     + All costs necessary to get work
                                                     + All costs to prepare it for use
 - Cost of assets = cash paid
 Or FMV of assets received                         
                           Or cash paid + FMV of Assets Given
 - Gifts (Donation)
   
If FMV is determined If FMV is not determined
Dr. F/A ( FMV)
 
Cr. Revenue DR. F/A ( Book Value)
                                               Cr. Revenue

 Example:

A company purchased machine at amount of     L.E. 500
Cost of shipping this machine ( freight in )         L.E. 100
Cost of installation                                                L.E. 50
Cost of Testing                                                       L.E. 40


Then: How can we recognize this machine in F/A?
                                                   
                                                                                                        Cost of Assets                                                       500
Cost necessary to get the work site                     100
Cost of installation                                              50
Cost to prepare it for use                                     40
Total capitalized amount                                    690

Note: We couldn't capitalize any expenses after starting to use the machine. Except if these expenses considered as additions which increase the quality, out put of services, extend the useful life of the machine.