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    Plant Assets, Cost Floors And Ceilings

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    1) What are the major characteristics of plant assets.

    2) Explain the rationale for the ceiling and floor in the lower-of-cost-or-market method of valuing inventories.

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    Question 1
    The following are some of the characteristics of plant assets:
    1. Tangible assets. This means that these assets can be touched and seen in contrast to intangible assets such as goodwill and patent.
    2. Useful or economic life is more than one year. This means that the company will get benefits from these assets for a period longer than a year.
    3. Depreciable. This means that the costs of these assets are allocated to the periodic expense all throughout their economic life rather than directly charged to operating expenses ...

    Solution Summary

    The solution goes over plant assets, cost floors and ceilings.