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You are a newly graduated CPA student and recently accepted a job as a junior accountant responsible for managing the property, plant, and equipment subledger for the Bermuda Airport Authority (BAA). The controller has asked you to update the outdated PPE subledger by adjusting the following areas: 1. Hold off on recording depreciation for the new BorderXpress automatic passport control kiosks that were installed last year until there is a better idea of their expected useful life. 2. Extend the useful lives for the airport's emergency vehicles, including the fire trucks, ambulance, and security trucks, from 8 years to 15 years. 3. The building maintenance group is responsible for ensuring the airport facilities are clean and in good working condition. They recently had to deal with a major plumbing blockage and damage to one of the runways that was caused by invasive tree roots coming from a green space near the domestic terminal. The tree root removal and cleaning of the debris from the plumbing system and runway repair cost the airport $280,000. The controller has asked that you capitalize these expenses, including them in the prop-erty, plant, and equipment subledger and depreciating over 50 years with a $60,000 salvage value. 4. A storage facility that is expected to be removed next year and is currently not in use by BAA is being depreciated. Last week at lunch you overheard the director of finance talking to the CFO about the negotiation of a major loan to pay for a new international terminal expansion; he is concerned with the current high debt levels as a percentage of total assets. What, if any, are your concerns with each of the controller's re-quests? How would you handle the controller's requests? Who is impacted by your decision? You are a newly graduated CPA student and recently accepted a job as a junior accountant responsible for managing the property, plant, and equipment subledger for the Bermuda Airport Authority (BAA). The controller has asked you to update the outdated PPE subledger by adjusting the following areas: 1. Hold off on recording depreciation for the new BorderXpress automatic passport control kiosks that were installed last year until there is a better idea of their expected useful life. 2. Extend the useful lives for the airport's emergency vehicles, including the fire trucks, ambulance, and security trucks, from 8 years to 15 years. 3. The building maintenance group is responsible for ensuring the airport facilities are clean and in good working condition. They recently had to deal with a major plumbing blockage and damage to one of the runways that was caused by invasive tree roots coming from a green space near the domestic terminal. The tree root removal and cleaning of the debris from the plumbing system and runway repair cost the airport $280,000. The controller has asked that you capitalize these expenses, including them in the prop-erty, plant, and equipment subledger and depreciating over 50 years with a $60,000 salvage value. 4. A storage facility that is expected to be removed next year and is currently not in use by BAA is being depreciated. Last week at lunch you overheard the director of finance talking to the CFO about the negotiation of a major loan to pay for a new international terminal expansion; he is concerned with the current high debt levels as a percentage of total assets. What, if any, are your concerns with each of the controller's re-quests? How would you handle the controller's requests? Who is impacted by your decision?
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As a junior accountant responsible for managing the property plant and equipment PPE subledger it is important to carefully consider the controllers requests and assess their impact on financial repor... View the full answer
Related Book For
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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