Page 427 - Accounting Principles (A Business Perspective)

10. Property, plant, and equipment

(Dollars in Thousands) 2002 2001
Total current assets $ 349,301 $ 340,978
Property, Plant and Equipment
Land 1,177 1,177
Buildings and improvements 64,848 63,006
Machinery and equipment 117,524 108,094
Software 29,217 22,097
$212,766 $194,374
Less accumulated depreciation 96,483 83,239
Total plant assets $ 116,283 $ 111,135
Other Assets
Goodwill and other intangibles,
less accumulated amortization
(2002-$3,565; 2001-$2,447) 16,178 19,931
Cash value of life insurance 16,443 14,725
Prepaid pension costs 19,099 15,242
Assets held for exchange 7,706 7,942
Notes receivable 4,736 4,921
Other 4,649 6,604
Total other assets $ 68,811 $ 69,365
Total Assets $534,395 $521,478

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 (In Part): Summary of Significant Accounting Policies
Property, Plant and Equipment
Property, plant and equipment are stated on the basis of cost and include expenditures for new
facilities, major renewals, betterments and software. Normal repairs and maintenance are
expensed as incurred.
Depreciation of plant, equipment and software is computed using the straight-line method. The
depreciable lives for buildings and improvements range from five to forty years; from three to ten
years for machinery and equipment; and from three to ten years for software.
As required, the Company adopted the American Institute of Certified Public Accountants

Statement of Position (SoP) 98-1, Accounting for the Costs of Computer Software Developed and
Obtained for Internal Use, in 1999. The SOP provides guidelines for determining whether costs
should be expensed or capitalized for computer software developed or purchased for internal use.
The Company's accounting policies for such items were already in substantial compliance with SOP
98-1 and, therefore, the adoption did not have a material effect on its 1999 consolidated financial
position or results of operations.

Subsequent expenditures (capital and revenue) on assets
Companies often spend additional funds on plant assets that have been in use for some time. They debit these
expenditures to: (1) an asset account; (2) an accumulated depreciation account; or (3) an expense account.
Expenditures debited to an asset account or to an accumulated depreciation account are capital

expenditures. Capital expenditures increase the book value of plant assets. Revenue expenditures, on the
other hand, do not qualify as capital expenditures because they help to generate the current period's revenues
rather than future periods' revenues. As a result, companies expense these revenue expenditures immediately and
report them in the income statement as expenses.
Betterments or improvements to existing plant assets are capital expenditures because they increase the
quality of services obtained from the asset. Because betterments or improvements add to the service-rendering

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