GAAP Applied to PPE & Intangibles

The video tutorial discusses the recording and reporting of property, plant, and equipment (PPE) and intangible assets under GAAP. It explains the cost model used by GAAP, emphasizing historical cost for PPE and systematic amortization for intangibles. The tutorial highlights disclosure requirements, including depreciation and amortization expenses, and the impact on quality of earnings. It contrasts GAAP with international standards, noting differences in capitalization and expense treatment, which affect earnings assessment.

What model does GAAP use for recording PPE?

• Market value model

• Fair value model

• Cost model

• Revaluation model

Which of the following is NOT a disclosure requirement for PPE under GAAP?

• Depreciation expense for the period

• Value of major classes of depreciable assets

• Methods used for recording depreciation

• Accumulated depreciation for individual assets

How are intangible assets amortized under GAAP?

• Over their useful life using a systematic method

• Using a revaluation model

• Based on market value

• Using a random method

What additional information is required for intangible assets that is not required for PPE?

• Estimated amortization expense for the next 5 years

• Accumulated depreciation by total

• Aggregate amortization expense

• Gross carrying amounts

Under GAAP, how are costs for developing intangible assets treated compared to international standards?

• Deferred until asset completion

• Capitalized over time

• Expensed immediately

• Recorded as liabilities