Question

Are property, plant, and equipment (PP E) initially recorded at historical cost under both IFRS and US GAAP?

1) Yes, they are initially recorded at historical cost under both IFRS and US GAAP.
2) No, they are not initially recorded at historical cost under both IFRS and US GAAP.
3) Cannot be determined.
4) Not applicable.

Answer 1

Yes, property, plant, and equipment (PP&E) are initially recorded at historical cost under both IFRS and US GAAP, which includes the purchase price and other directly attributable costs.

Step-by-step explanation:

Property, plant, and equipment (PP&E) are initially recorded at historical cost under both International Financial Reporting Standards (IFRS) and United States Generally Accepted Accounting Principles (US GAAP). The historical cost principle requires that assets be recorded at the cash or cash-equivalent amount at the time the asset is acquired. This includes the purchase price and any costs directly attributable to bringing the asset to working condition for its intended use, such as installation and delivery fees.

The answer to the student's question is: 1) Yes, they are initially recorded at historical cost under both IFRS and US GAAP.