kieso, weygandt ACCOUNTING IFRS EDITION Propered by: Goby Harmo! University of Califor a Sa nta Barbara joa festmor mt Colleg WILEYAcquisition and CHAPTER 10 Disposition of Property, Plant, and Equipment LEARNING OBJECTIVES After studying this chapter, you should be able to: 1. Identify property, plant, and 4. Describe the accounting equipment and its related costs. treatment for costs subsequent to acquisition. 2. Discuss the accounting s problems associated with 5. Describe the accounting interest capitalization. treatment for the disposal of property, plant, and equipment. 3. Explain accounting issues related to acquiring and valuing plant assets. 10-2PREVIEW OF CHAPTER 10 Property, Plant, and eu Prune N OF PROPERTY, PLANT, AND EQUIPMENT Equipment ‘Acquistion of property, plant, and equipment costof and Costof equipment Selfconstructed assets I Interest Costs During Construction + Qualifying assets + Capitalization period + Amount to capitalize + Example + Specialissues + Observations Valuation of Property, Plant, and Equipment Cash discounts Deferred-payment contracts ‘Lump-sum purchases, Issuance of shares Exchanges of non- ‘monetary assets Government grants I Costs Subsequent ‘to Acquisition + Additions + Improvements and replacements + Rearrangement and reorganization + Repairs + Summary of casts ‘subsequent to acquisition, Property, Plant, and Equipment + Sale of plant assets + tavoluntary 10-3 Intermediate Accounting IFRS 3rd Edition Kieso » Weygandt WarfieldProperty, Plant, and LEARNING OBJECTIVE 4 Identify property, plant, and Equipment equipment and its related costs. Property, plant, and equipment are assets of a durable nature. Other terms commonly used are plant assets and fixed assets. » “Used in operations” and not Includes: for resale. = Land, = Building structures (offices, factories, usually depreciated. warehouses), and > Long-term in nature and = Equipment (machinery, furniture, tools). » Possess physical substance. 10-4 LotAcquisition of Property, Plant, and Equipment (PP&E) 105 Historical cost measures the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use. In general, costs include: 1. Purchase price, including import duties and non-refundable purchase taxes, less trade discounts and rebates. 2. Costs attributable to bringing the asset to the location and condition necessary for it to be used in a manner intended by the company. LotAcquisition of Property, Plant, and Equipment (PP&E) Companies value property, plant, and equipment in subsequent periods using either the ¢@ cost method or ¢ fair value (revaluation) method. 10-6 Lot10-7 Acquisition of PP&E Cost of Land All expenditures made to acquire land and ready it for use. Costs typically include: (1) purchase price; (2) closing costs, such as title to the land, attorney's fees, and recording fees; (3) costs of grading, filling, draining, and clearing; (4) assumption of any liens, mortgages, or encumbrances on the property; and (5) additional land improvements that have an indefinite life. LotAcquisition of PP&E Cost of Land ¢@ Improvements with limited lives, such as private driveways, walks, fences, and parking lots, are recorded as Land Improvements and depreciated. @ Land acquired and held for speculation is classified as an investment. @ Land held by a real estate concern for resale should be classified as inventory. 10-8 LotAcquisition of PP&E 10-9 Cost of Buildings Includes all expenditures related directly to acquisition or construction. Costs include: materials, labor, and overhead costs incurred during construction and ¢@ professional fees and building permits. Companies consider all costs incurred, from excavation to completion, as part of the building costs. Lot40-10 Acquisition of PP&E Cost of Equipment Include all expenditures incurred in acquiring the equipment and preparing it for use. Costs include: ° *-o¢ ¢ © @ purchase price, freight and handling charges, insurance on the equipment while in transit, cost of special foundations if required, assembling and installation costs, and costs of conducting trial runs. LotAcquisition of PP&E E10.1: The expenditures and receipts below are related to land, land improvements, and buildings acquired for use in a business enterprise. Determine how the following should be classified: a. Money borrowed to pay building contractor a. Notes Payable (signed a note) b. Payment for construction from note proceeds b. Buildings c. Cost of land fill and clearing c. Land d. Delinquent real estate taxes on property d. Land assumed by purchaser e. Premium on 6-month insurance policy during e. Buildings construction 10-1 LotAcquisition of PP&E E10.1: Determine how the following should be classified: f. 40-12 Refund of 1-month insurance premium because construction completed early Architect's fee on building Cost of real estate purchased as a plant site (land €200,000 and building €50,000) Commission fee paid to real estate agency Cost of razing and removing building Installation of fences around property f. (Buildings) Buildings Land Land Land Land Improvements LotAcquisition of PP&E 10.1: Determine how the following should be classified: 10-13, Proceeds from residual value of demolished building . Interest paid during construction on money borrowed for construction Cost of parking lots and driveways Cost of trees and shrubbery planted (permanent in nature) Excavation costs for new building (Land) - Buildings Land Improvements Land Buildings LotAcquisition of PP&E Self-Constructed Assets Costs include: = Materials and direct labor @ Overhead can be handled in two ways: 1. Assign no fixed overhead. 2. Assign a portion of all overhead to the construction process. Companies use the second method extensively. 10-14 LotInterest Costs LEARNING OBJECTIVE 2 Discuss the accounting problems During Construction associated with interest capitalization Three approaches have been suggested to account for the interest incurred in financing the construction. $0 Increase to Cost of Asset $? | . I Capitalize no = Capitalize interest during Capitalize actual all costs of construction costs incurred during funds construction sus 104 I Capitalization of interest Costs IFRS 10-15 LozInterest Costs During Construction @ IFRS requires — capitalizing actual interest (with modification). ¢@ Consistent with historical cost. ¢@ Capitalization considers three items: 1. Qualifying assets. 2. Capitalization period. 3. Amountto capitalize. 10-16 LozInterest Costs During Construction Qualifying Assets Require a substantial period of time to get them ready for their intended use or sale. Two types of assets: @ Assets under construction for a company’s own use. @ Assets intended for sale or lease that are constructed or produced as discrete projects. 10-17 Loz10-18 Interest Costs During Construction Capitalization Period Begins when: 1, Expenditures for the assets are being incurred. 2. Activities for readying the asset for use or sale are in progress . 3. Interest costs are being incurred. Ends when: The asset is substantially complete and ready for use. Lo2Interest Costs During Construction Amount to Capitalize Capitalize the lesser of: 1. Actual interest cost incurred. 2. Avoidable interest - the amount of interest cost during the period that a company could theoretically avoid if it had not made expenditures for the asset. 10-19 Loz10-20 Amount to Capitalize Weighted-Average Accumulated Expenditures In computing the weighted-average accumulated expenditures, a company weights the construction expenditures by the amount of time (fraction of a year or accounting period) that it can incur interest cost on the expenditure. Lo2Weighted-Average Accumulated Expenditures ——“‘aOCés;;OC~;~CW!O!WO™O To illustrate, assume that Han Ren Group decides to build a warehouse, which is estimated to take 17 months to complete, starting in 2019. The company makes the following payments to the contractor in 2019: $240,000 on March 1, $480,000 on July 1, and $360,000 on November 1. The company computes the weighted- average accumulated expenditures for the year ended December 31, 2019, as shown. ILLUSTRATION 10.2 Expenditures Capitalization Weighted-Average Date Amount x Period” = Accumulated Expenditures March 1 $ 240,000 10/12 $200,000 July 1 480,000 6/12 240,000 November 1 360,000 2/12 60,000 40-21 Lo2Amount to Capitalize 10-22 Interest Rates Selecting Appropriate Interest Rate: 1. For the portion of weighted-average accumulated expenditures that is less than or equal to any amounts borrowed specifically to finance construction of the assets, use the interest rate incurred on the specific borrowings. For the portion of weighted-average accumulated expenditures that is greater than any debt incurred specifically to finance construction of the assets, use a weighted average of interest rates incurred on all other outstanding debt during the period. Lo2Amount to Capitalize Interest Rates Shown is the computation of a capitalization rate (weighted- average interest rate) for debt greater than the amount incurred specifically to finance construction of the assets. Principal Interest 12%, 2-year note $ 600,000 $ 72,000 9%, 10-year bonds 2,000,000 180,000 7.5%, 20-year bonds 5,000,000 375,000 $7,600,000 $627,000 , Total Interest $627,000 _ ation Rate = etal Principal ~ $7,600,000 — °7°% Capit: ILLUSTRATION 10.3, 10-23, LozComprehensive Example On November 1, 2018, Shalla Company contracted Pfeifer Construction Co. to construct a building for $1,400,000 on land costing $100,000 (purchased from the contractor and included in the first payment). Shalla made the following payments to the construction company during 2019. January 1 March 4 May 1 December 31 Total $210,000 $300,000 $540,000 $450,000 $1,500,000 10-24 LozComprehensive Example Pfeifer Construction completed the building, ready for occupancy, on December 31, 2019. Shalla had the following debt outstanding at December 31, 2019. Specific Construction Debt 1. 15%, 3-year note to finance purchase of land and construction of the building, dated December 31, 2018, with interest payable annually on December 31 $750,000 Other Debt 2. 10%, 5-year note payable, dated December 31, 2015, with interest payable annually on December 31 $550,000 3. 12%, 10-year bonds issued December 31, 2014, with interest payable annually on December 31 $600,000 Compute weighted-average accumulated expenditures for 2019. 10-25 LozComprehensive Example Compute weighted-average accumulated expenditures for 2019. Expenditures Current-Year Capitalization Weighted-Average Date Amount x Period = Accumulated Expenditures January 1 $ 210,000 March 1 300,000 May 1 540,000 December 31 450,000 501 10 ILLUSTRATION 10.4 ‘Computation of Weighted-Average Accumulated Expenditures Lo2Comprehensive Example | | ILLUSTRATION 10.5, Compute the avoidable interest. ‘Computation of Avoidable Interest Weighted-Average Accumulated Expenditures x Interest Rate = Avoidable Interest $750,000 70,000" $820,000 ®The amount by which the weighted-average accumulated expenditures exceeds the specific construction loan, ‘capitalization rate computation: Principal Interest 10%, 5-year note $550,000 $ 55,000 12%, 10-year bonds 600,000 72,000 P — Total interest _ - Capitalization Rate = +3521 principal = 10-27 LozComprehensive Example Compute the actual interest cost, which represents the maximum amount of interest that it may capitalize during 2019. Construction note $750,000 x .15 = $112,500 5-year note $550,000 x .10= 55,000 10-year bonds $600,000 x .12= 72,000 Actual interest $239,500 ILLUSTRATION 10.6 Computation of Actual The interest cost that Shalla capitalizes is the Interest Cost lesser of $120,228 (avoidable interest) and $239,500 (actual interest), or $120,228. 10-28 LozComprehensive Example 10-29 Shalla records the following journal entries during 2019: January 1 March 1 May 4 December 31 Land Buildings (or CIP) Cash Buildings Cash Buildings Cash Buildings Cash Buildings (Capitalized Interest) Interest Expense Cash 100,000 410,000 300,000 540,000 450,000 120,228 119,272 210,000 300,000 540,000 450,000 239,500 Lo2Comprehensive Example At December 31, 2019, Shalla discloses the amount of interest capitalized either as part of the income statement or in the notes accompanying the financial statements. ILLUSTRATION 10.7 Income from operations XXXX Capitatzed Interest Other expenses and losses: Reported in the Income Interest expense $239,500 Statement Less: Capitalized interest 120,228 119,272 Income before income taxes XXXX Income taxes XXX Net income XK ILLUSTRATION 10.8 Capitalized Interest Disclosed in a Note Note 1: Accounting Policies. Capitalized interest. During 2019, total interest cost was $239,500, of which $120,228 was capitalized and $119,272 was charged to expense. The capitalization rate used was 11.04%. 10-30 LozInterest Costs During Construction Special Issues Related to Interest Capitalization 1, Expenditures for Land @ Ifland is purchased as a site for a structure, interest costs capitalized during the period of construction are part of the cost of the plant, not the land. Conversely, if the company develops land for lot sales, it includes any capitalized interest cost as part of the acquisition cost of the developed land. 2. Interest Revenue @ Ingeneral, companies should not offset interest revenue against interest cost unless earned on specific borrowings. 10-31 LozValuation of Property, LEARNING OBJECTIVE 3 Explain accounting issues Plant, and Equipment related to acquiring and valuing 10-32 plant assets. Companies should record property, plant, and equipment: @ at the fair value of what they give up or atthe fair value of the asset received, whichever is more clearly evident. Lo310-33, Valuation of PP&E Cash Discounts — Discounts for prompt payment. Deferred-Payment Contracts — Assets purchased on long-term credit contracts are valued at the present value of the consideration exchanged. Lump-Sum Purchases — Allocate the total cost among the various assets on the basis of their relative fair market values. Issuance of Shares — The market price of the shares issued is a fair indication of the cost of the property acquired. Lo310-34 Valuation of PP&E Exchanges of Non-Monetary Assets Ordinarily accounted for on the basis of: @ the fair value of the asset given up or @ the fair value of the asset received, whichever is clearly more evident. Companies should recognize immediately any gains or losses on the exchange when the transaction has commercial substance. Lo3Exchanges of Non-Monetary Assets Meaning of Commercial Substance Exchange has commercial substance if the future cash flows change as a result of the transaction. That is, if the two parties’ economic positions change, the transaction has commercial substance. Type of Exchange Accounting Guidance Exchange has commercial Recognize gains and losses substance. immediately. Exchange lacks commercial Defer gains and losses. substance. ILLUSTRATION 10.10 Accounting for Exchanges 10-35 Lo310-36 Exchanges of Non-Monetary Assets Loss Situation (Has Commercial Substance) Companies recognize a loss if the exchange has commercial substance, Rationale: Companies should not value assets at more than their cash equivalent price. If the loss were deferred, assets would be overstated. Lo3Loss Situation (Has Commercial Substance) Illustration: Information Processing PA trades its used machine for a new model at Jerrod Business Solutions NV. The exchange has commercial substance. The used machine has a book value of €8,000 (original cost €12,000 less €4,000 accumulated depreciation) and a fair value of €6,000. The new model lists for €16,000. Jerrod gives Information Processing a trade-in allowance of €9,000 for the used machine. Information Processing computes the cost of the new asset as follows. List price of new machine €16,000 Less: Trade-in allowance for used machine 9,000 Cash payment due 7,000 Fair value of used machine 6,000 ILLUSTRATION 10.11 Computation of Cost of Cost of new machine New Machine 10-37 Lo3Loss Situation (Has Commercial ubstance Illustration: Information Processing records this transaction as follows: Equipment 13,000 Accumulated Depreciation—Equipment 4,000 Loss on Disposal of Equipment 2,000 Equipment 12,000 Cash 7,000 ILLUSTRATION 10.12 Computation of Loss (on Disposal of Used Machine Loss on Fair value of used machine Disposal Less: Book value of used machine Loss on disposal of used machine 10-38, Lo310-39 Exchanges of Non-Monetary Assets Gain Situation (Has Commercial Substance) Company usually records the cost of a non-monetary asset acquired in exchange for another non-monetary asset at the fair value of the asset given up, and immediately recognizes a gain. Lo3Gain Situation (Has Commercial Substance) 10-40 Illustration: Interstate Transportation Company exchanged a number of used trucks plus cash for a semi-truck. The used trucks have a combined book value of $42,000 (cost $64,000 less $22,000 accumulated depreciation). Interstate’s purchasing agent, experienced in the secondhand market, indicates that the used trucks have a fair market value of $49,000. In addition to the trucks, Interstate must pay $11,000 cash for the semi-truck. Interstate computes the cost of the semi-truck as follows. ILLUSTRATION 10.13 Fair value of trucks exchanged $49,000 Computation of Semi- Cash paid 11,000 Cost of semi-truck $60,000 Lo3Gain Situation (Has Commercial ubstance Illustration: Interstate records the exchange transaction as follows: Truck (semi) 60,000 Accumulated Depreciation—Trucks 22,000 Trucks (used) 64,000 Gain on Disposal of Trucks 7,000 Cash 11,000 Fair value of used trucks $49,000 Contant can Gai Cost of used trucks $64,000 en Dloposa of Used ain on Less: Accumulated depreciation 22,000 Trucks: Disposal 00k value of used trucks (42,000) Gain on disposal of used trucks $ 7,000 10-44 Lo310-42 Exchanges of Non-Monetary Assets Lacks Commercial Substance Now assume that Interstate Transportation Company exchange lacks commercial substance. Interstate defers the gain of $7,000 and reduces the basis of the semi-truck. Lo3Exchanges of Non-Monetary Assets Illustration: Interstate records the exchange transaction as follows: Trucks (semi) 53,000 Accumulated Depreciation—Trucks 22,000 Trucks (used) 64,000 Cash 11,000 Fair value of semi-truck $60,000 Book value of used trucks $42,000 Less: Gain deferred 7,000 OR Plus: Cash paid 11,000 Basis of semi-truck $53,000 Basis of semi-truck $53,000 ILLUSTRATION 10.15 Basis of Semi-Truck—Fair Value vs. Book Value 10-43, Lo3Exchanges of Non-Monetary Assets Summary of Gain and Loss Recognition on Exchanges of Non-Monetary Assets ILLUSTRATION 10.16 Compute the total gain or loss on the transaction. This amount is equal to the difference between the fair value of the asset given up and the book value of the asset given up. (a) If the exchange has commercial substance, recognize the entire gain or loss. (b) If the exchange lacks commercial substance, no gain or loss is recognized. Disclosure include ~~ nature of the transaction(s), method of accounting for the assets exchanged, and @ gains or losses recognized on the exchanges. 10-44 Lo310-45 Valuation of PP&E Government Grants Government Grants are assistance received from a government in the form of transfers of resources to a company in return for past or future compliance with certain conditions relating to the operating activities of the company. IFRS requires grants to be recognized in income (income approach) on a systematic basis that matches them with the related costs that they are intended to compensate. Lo310-46 Government Grants Example 1: Grant for Lab Equipment. Spectrum AG received a €500,000 subsidy from the government to purchase lab equipment on January 2, 2019. The lab equipment cost is €2,000,000, has a useful life of five years, and is depreciated on the straight-line basis. IFRS allows AG to record this grant in one of two ways: 1. Credit Deferred Grant Revenue for the subsidy and amortize the deferred grant revenue over the five-year period. 2. Credit the lab equipment for the subsidy and depreciate this amount over the five-year period. Lo3Government Grants 10-47 Example 1: Grant for Lab Equipment. If Spectrum chooses to record deferred revenue of €500,000, it amortizes this amount over the five-year period to income (€100,000 per year). The effects on the financial statements at December 31, 2019, are: ILLUSTRATION 10.17 Government Grant Recorded as Deferred Statement of Financial Position Revenue Non-current assets Equipment €2,000,000 Less: Accumulated depreciation 400,000 €1,600,000 Non-current liabilities Deferred grant revenue € 300,000 Current liabilities Deferred grant revenue 100,000 Income Statement Grant revenue for the year € 100,000 Depreciation expense for the year 400,000 Net income (loss) effect € (800,000) Lo3Government Grants Example 1: Grant for Lab Equipment. If Spectrum chooses to reduce the cost of the lab equipment, Spectrum reports the equipment at €1,500,000 (€2,000,000 - €500,000) and depreciates this amount over the five-year period. The effects on the financial statements at December 31, 2019, are: Statement of Financial Position Non-current assets Equipment €1,500,000 Less: Accumulated depreciation 300,000 Income Statement Depreciation expense for the year €1,200,000 € 300,000 ILLUSTRATION 10.18 Government Grant Adjusted to Asset 10-48 Lo310-49 Government Grants Example 2: Grant for Past Losses. Flyaway Airlines has incurred substantial operating losses over the last five years. The City of Plentiville does not want to lose airline service and therefore agrees to provide a cash grant of $1,000,000 to the airline to pay off its creditors so that it may continue service. Because the grant is given to pay amounts owed to creditors for past losses, Flyaway Airlines should record the income in the period it is received. Cash 1,000,000 Grant Revenue 1,000,000 If the conditions indicate that Flyaway must satisfy some future obligations, then it is appropriate to credit Deferred Grant Revenue and amortize it over the appropriate periods in the future. Lo310-50 Government Grants Example 3: Grant for Borrowing Costs. Flyaway The City of Puerto Aloa is encouraging the high-tech firm TechSmart to move its plant to Puerto Aloa. The city has agreed to provide an interest-free loan of $10,000,000, with the loan payable at the end of 10 years, provided that TechSmart will employ at least 50 percent of its work force from the community of Puerto Aloa over the next 10 years. TechSmart’s incremental borrowing rate is 9 percent. The present value of the future loan payable ($10,000,000) is $6,499,300 ($10,000,000 x .64993i=9%, n=5). The entry to record the borrowing is as follows. Cash 6,499,300 Notes Payable 6,499,300 Lo310-51 Government Grants In addition, using the deferred revenue approach, the company records the grant as follows ($10,000,000 - $6,499,300). Cash 3,500,700 Deferred Grant Revenue 3,500,700 TechSmart then uses the effective-interest rate to determine interest expense of $584,937 (9% x $6,499,300) in the first year. The company also decreases Deferred Grant Revenue and increases Grant Revenue for $584,937.As a result, the net expense related to the borrowing is zero in each year. Lo3Costs Subsequent LEARNING OBJECTIVE 4 wags Describe the accounting to Acquisition treatment for costs subsequent to acquisition Recognize costs subsequent to acquisition as an asset when the costs can be measured reliably and it is probable that the company will obtain future economic benefits. Evidence of future economic benefit would include increases in 1. useful life, 2. quantity of product produced, and 3. quality of product produced. 10-52 Lo4Costs Subsequent to Acqui Major Types of Expenditures Additions. Increase or extension of existing assets. Improvements and Replacements. Substitution of a better or similar asset for an existing one. Rearrangement and Reorganization. Movement of assets from one location to another. Repairs. Expenditures that maintain assets in condition for operation. 10-53, Lo4Costs Subsequent to Acquisition Type of Expenditure Normal Accounting Treatment Additions Capitalize cost of addition to asset account. Improvements and Remove cost of and accumulated depreciation on old asset, recognizing replacements any gain or loss. Capitalize cost of improvement/replacement. Rearrangement and Expense costs of rearrangement and reorganization costs as expense. reorganization Repairs (a) Ordinary: Expense cost of repairs when incurred (b) Major: Remove cost and accumulated depreciation of old asset, recognizing any gain or loss. Capitalize cost of major repair. ILLUSTRATION 10.21 ‘Summary of Costs Subsequent to Acquisition of Property, Plant, and Equipment In determining how costs should be allocated subsequent to acquisition, companies follow the same criteria used to determine the initial cost of property, plant, and equipment. They recognize costs as an asset when the costs can be measured reliably and it is probable that the company will obtain future economic benefits. 10-54 Lo4Disposition of Property, —Learnne ossectwe s Describe the accounting Plant, and Equipment treatment for the disposal of 10-55 property, plant, and equipment Acompany may retire plant assets voluntarily or dispose of them by ° a4 ° a4 Sale, Exchange, Involuntary conversion, or Abandonment. Depreciation must be taken up to the date of disposition. LosDisposition of PP&E Sale of Plant Assets Illustration: Barret Group recorded depreciation on a machine costing €18,000 for nine years at the rate of €1,200 per year. If it sells the machine in the middle of the tenth year for €7,000, Barret records depreciation to the date of sale as: Depreciation Expense (€1,200 x %) 600 Accumulated Depreciation—Machinery 600 10-56 LosDisposition of PP&E Illustration: Barret Group recorded depreciation on a machine costing €18,000 for nine years at the rate of €1,200 per year. If it sells the machine in the middle of the tenth year for €7,000, Barret records depreciation to the date of sale. Record the entry to record the sale of the asset: Cash 7,000 Accumulated Depreciation—Machinery 11,400 Machinery 18,000 Gain on Disposal of Machinery 400 10-57 Los10-58, Disposition of PP&E Involuntary Conversion Sometimes an asset's service is terminated through some type of involuntary conversion such as fire, flood, theft, or condemnation. Companies report the difference between the amount recovered (e.g., from a condemnation award or insurance recovery), if any, and the asset's book value as a gain or loss. They treat these gains or losses like any other type of disposition. LosDisposition of PP&E Illustration: Camel Transport Corp. had to sell a plant located on company property that stood directly in the path of an interstate highway. Camel received $500,000, which substantially exceeded the book value of the land of $150,000 and the book value of the building of $100,000 (cost of $300,000 less accumulated depreciation of $200,000). Camel made the following entry. Cash 500,000 Accumulated Depreciation—Buildings 200,000 Buildings 300,000 Land 150,000 Gain on Disposal of Plant Assets 250,000 10-59 Los10-60 Copyright Copyright © 2018 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. 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