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Adidas410s
01-19-2007, 04:40 PM
I'm debating with somebody whether or not an acquisition of property, equipment, land, etc would be considered a "capital expinditure." Any help in clarifying would be appreciated.

ASUFrisbeeStud
01-19-2007, 04:42 PM
Depends what its all for.

Bullaholic
01-19-2007, 04:44 PM
Originally posted by Adidas410s
I'm debating with somebody whether or not an acquisition of property, equipment, land, etc would be considered a "capital expinditure." Any help in clarifying would be appreciated.

I can't believe you, Adidas---what do you suppose your mentor Phil C does for a living? Shame, shame....

Adidas410s
01-19-2007, 04:49 PM
k I got an answer elsewhere...and of course...I was right! :)

Adidas410s
01-19-2007, 04:49 PM
Originally posted by Bullaholic
I can't believe you, Adidas---what do you suppose your mentor Phil C does for a living? Shame, shame....

He's retired from the accounting world to be able to spend more time working as a full-time matador in El Paso :)

Phil C
01-19-2007, 05:04 PM
Originally posted by Adidas410s
He's retired from the accounting world to be able to spend more time working as a full-time matador in El Paso :)

:) :clap:

By the way Ad - what was the answer.

RMAC
01-19-2007, 05:05 PM
Fubar.

Phil C
01-19-2007, 05:09 PM
Originally posted by Adidas410s
I'm debating with somebody whether or not an acquisition of property, equipment, land, etc would be considered a "capital expinditure." Any help in clarifying would be appreciated.

I would say all land, buildings or major improvements (such as paved parking lots, etc) should be capatalized no matter what the costs.
If it is equipment or furniture or vehicles I would capatalized if the cost was $5,000 or more (this is a matter of opinion, of course, and accountants may disagree with the amount.

The reason I think the $5,000 or over threshhold is good is because that amount would account for probably at least 90% of the costs of capital outlay plus depreciation, etc. If you were to capatalize everything from $100 or up you would spend 90% of your time keeping up with items that were less than $5,000. Of course company policy is what counts.

This does not mean you can't keep a record of all items under $5,000. It is just that you won't have to worry about original costs or depreciation and everything but they could still be listed by item and seriel number, model no. etc.

Phil C
01-19-2007, 05:13 PM
I feel all items of land and buildings should be included just to keep the record straight. You could have a storage building that costs less than $5,000 but I would include also for the record. But that is just a personal choice.
I also feel that major improvements under $5,000 are not worth capatalizing.

Some items such as lawn mowers wouldn't be capatalized if they cost $150.00 or so but I would still list them just for the record. No need to encourage employees or anyone to accidently walk off with one. :)

Time for me to go back to the bulls. Ole! :)

Adidas410s
01-19-2007, 05:14 PM
Originally posted by Phil C
:) :clap:

By the way Ad - what was the answer.

I was calculating free cash flow on a few of our customers in an analysis that I'm puting together. Long and short...one of them had about $84 million in "purchases of plant, property and equipment" (which my boss and I agreed should be considered a capital expenditure) and about $560 million in "acquisitions of metals service centers and net asset purchases, net of cash acquired" and he didn't think that the $560 million should be considered as well. I felt that it should...confirmed it with a few guys in our accounting dept...and so it shall be.

:)

Phil C
01-19-2007, 05:16 PM
Originally posted by Adidas410s
I was calculating free cash flow on a few of our customers in an analysis that I'm puting together. Long and short...one of them had about $84 million in "purchases of plant, property and equipment" (which my boss and I agreed should be considered a capital expinditure) and about $560 million in "acquisitions of metals service centers and net asset purchases, net of cash acquired" and he didn't think that the $560 million should be considered as well. I felt that it should...confirmed it with a few guys in our accounting dept...and so it shall be.

:)

I know you can't give me all the details but based on what you have written I also agree.

:)

buff4life
01-19-2007, 05:17 PM
i'm third in state in Accounting so....maybe i can but i doubt it...i'm too lazy to read all the thing

CenTexSports
01-19-2007, 05:18 PM
The length of use is also a factor for business purposes. Something that is consumed over less than a certain period even though a large dollar purchase could not be capitalized.

Adidas410s
01-19-2007, 05:20 PM
Originally posted by Phil C
I know you can't give me all the details but based on what you have written I also agree.

:)

yeah...i was trying to give enough information while still being vague. Then again...they are a public company so you could just as easily access all of this information from their SEC filings. :)

kaorder1999
01-19-2007, 06:22 PM
my fiancee is an accountant...she can help you....shes not here right now though