PPE- ACCOUNTING TREATMENT

1 Cost of opening a new facility Exp

2 Cost of introducing a new product or service, including costs of advertising and Exp
promotion
3 Costs of conducting business in a new location or with a new class of customer, Exp
including costs of staff training
4 Administration and other general overhead costs Exp
5 Costs incurred while an item capable of operating in the manner intended by Exp
management has yet to be brought into use or is operated at less than full capacity
Initial operating losses
6 Costs of relocating or reorganizing part or all of an entity’s operations. Exp
7 Income from incidental operations Exp
8 Savings on self-constructed assets Exp
9 Attorney’s fees and other expenditures for establishing clean title (Professional fees) Land
10 Broker commission (professional fees) Land
11 Title guarantee insurance of land Land
12 Escrow fees Land
13 Fees for registration and transfer of title Land
14 Cost of relocation or reconstruction of property belonging to others in order to Land
acquire possession
15 Mortgages, encumbrances and interest on such mortgages assumed by the buyer Land
16 Unpaid taxes up to date of acquisition assumed by the buyer Land
17 Cost of survey Land
18 Cost of clearing, grading and demolishing unwanted old building, less proceeds from Land
salvage
19 Payments to tenants to induce them to vacate the premises Land
20 Cost of permanent improvements, cost of grading, leveling and landfill Land
21 Cost of option to buy the acquired land. If the land is not acquired, the cost of option Land
is expensed outright
22 Assessment by city for drainage project Land
23 Special assessment Land
24 Land and building purchased on a lump-sum price If the building is unusable, the Land only
acquisition cost is allocated to the land only.
25 Legal fees incurred in connection with the purchase (professional fees) Bldg
26 Unpaid taxes up to the date of purchase assumed by the buyer. Bldg
27 Interest, liens and other encumbrances assumed by the buyer Bldg
28 Payments to tenants to induce them to vacate the building Bldg
29 Any renovating or remodeling costs incurred to put the building purchased in a Bldg
condition suitable for the intended use.
30 Cost of razing old building Bldg
31 Interest cost on specific borrowings during construction Bldg
32 Net cost of demolishing old building to make room for the construction of new Bldg
33 Temporary quarters for construction crew Bldg
34 Temporary quarters for tools and materials Bldg
35 Land is acquired and the net cost of demolishing old building Land
36 New building construction cost Bldg

1
37 Excavation before new construction Bldg
38 Permanent fences, water systems and sidewalks (provided not part of blueprint) LI
39 Driveways & walk paths –part of building plan Bldg.
40 Cost of trees and other landscaping (provided not part of blueprint) LI
41 Streetlights and parking lots ( provided not part of blueprint) LI
42 Sale of scrap from old building Ded. From Bldg
43 Salvage materials from demolition Ded. From Bldg

44 Expenditures incurred during the construction period such as borrowing cost and Self-Const Bldg
insurance
45 Architect fee Self-Const Bldg
46 Superintendent fee Self-Const Bldg
47 Cost of excavation Self-Const Bldg
48 Building perm it or license Self-Const Bldg
49 Safety inspection fee Self-Const Bldg
50 Cost of temporary safety fence around construction site and cost of subsequent Self-Const Bldg
removal thereof. However, the construction of a permanent fence after the
completion of the building is recognized as land improvement.
51 Cost of temporary building used as construction office and tools or materials shed Self-Const Bldg
52 Expenditures for service equipment and fixtures made as permanent part of the Self-Const Bldg
structure
53 Materials used, labor employed and overhead directly attributable to construction Self-Const Bldg
(direct construction cost)
54 Ventilation systems, plumbing and lighting systems (provided not part of blueprint) Bldg. Improv
Otherwise, it is included as cost of the constructed building.
55 Cost of elevator, escalator and similar items (provided not part of blueprint) Bldg. Improv
Otherwise, it is included as cost of the constructed building.
56 Immovable fixtures attached to the building (provided not part of blueprint) Bldg. Improv
Otherwise, it is included as cost of the constructed building.
57 Purchase price of equipment Equipmt
58 Freight, handling charge, storage and other cost related to the acquisition Equipm
59 Insurance while in transit Equipm
60 Installation cost, including site preparation and assembling Equipm
61 Cost of testing and trial run, and other cost necessary in preparing the machinery for Equipm
use
62 Initial estimate of cost of dismantling and removing the machinery and restoring the Equipm
site on which it is located, for which the entity has a present obligation.
63 Fee paid to consultants for advice on the acquisition of the machinery Equipm
64 Cost of safety rail and platform surrounding machine Equipm
65 Cost of water device to keep machine cool Equipm
66 Irrecoverable taxes Equipm
67 Major spare parts and stand-by equipment are treated as PPE when the entity Equipm
expects to use them during more than one period.
68 Supervision by management during construction Bldg.