Section 2: 30–40%2D
Property, Plant, and Equipment
Exam insight
Depreciation questions almost always throw in a partial year or a method switch. A tough one is SYD (sum-of-years-digits) with a mid-year purchase, where you prorate the first year's fraction and then the second year straddles two SYD fractions. For impairment, lock in the two-step test. Step 1 compares carrying value to undiscounted cash flows; step 2 measures the loss at fair value. Skip step 1 and jump straight to fair value, and you get the wrong answer.
What AICPA wants you to know
- 1Determine the initial cost basis of PP&E (what to capitalize)
- 2Calculate depreciation under straight-line, DDB, and sum-of-years-digits
- 3Record disposal of PP&E (gain/loss calculation)
- 4Apply impairment testing rules (recoverability test, then measurement)
- 5Distinguish between capital expenditures and repairs/maintenance
Patterns in this topic
The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.
Exam tip
Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.