Question

access the balance sheet of a publicly traded company, and list what items of assets are reported in the property, plant, and equipment section on the asset side. Pick up any one item from the property, plant, and equipment, and discuss how you determine the cost of that item to be reported on the balance sheet.

Answer 1

ANSWER

In the balance sheet of a publicly-traded company, the Assets side normally includes under the heading “Property, plant and equipment” PPE assets like land, buildings (Factory, Stores & Office), Factory & Office equipment, machinery, business used vehicles, Office furniture and fixtures, etc.

The most important and valuable item under PPE is “Machinery”. The cost of the machinery is determined through adding following:

a) The cost price or purchase price, except the Vat credit taken on the purchases.

b) The transportation of the machinery to factory.

c) The installation of the machinery to the workable condition.

d) The initial training expenses of the workers on the machinery.

e) Heavy repair and maintenance expenses on the machinery.

The sum total of the above will be put under the “machinery” under the heading PPE on the Fixed Assets side of the ASSETS column of the Balance Sheet.

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