1 chapter 27 furniture, fixtures, and equipment ffe
TRANSCRIPT
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Chapter 27Chapter 27Furniture, Fixtures, and Furniture, Fixtures, and
EquipmentEquipment
FFEFFE
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FFE as Capital ItemsFFE as Capital Items
Capital items are long-life items.Capital items are long-life items. Most capital items are depreciable Most capital items are depreciable
assetsassets Typically, the cost of many FFE items Typically, the cost of many FFE items
cannot be used as tax deductions in cannot be used as tax deductions in the year they were purchased.the year they were purchased.
Value is depreciated over a period of Value is depreciated over a period of yearsyears
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Management ConsiderationsManagement Considerations
Effect of future plans might have on the Effect of future plans might have on the need for FFEneed for FFE
ObsolescenceObsolescence Capitalizing an operating expenseCapitalizing an operating expense Operational savingsOperational savings Persons involvedPersons involved
– User(s)User(s)– Owner-manager(s)Owner-manager(s)– Buyer(s)Buyer(s)– Consultant(s)Consultant(s)
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General Procedures in FFE General Procedures in FFE PurchasingPurchasing
Is replacement necessary?Is replacement necessary? Visiting trade showsVisiting trade shows Financing and the need to obtain Financing and the need to obtain
competitive bidscompetitive bids
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The FFE SpecificationThe FFE Specification
Similar in scope to other Similar in scope to other specificationsspecifications
Supplier services are very importantSupplier services are very important– Instructions to biddersInstructions to bidders– General conditionsGeneral conditions– Specific conditionsSpecific conditions– Detailed drawingsDetailed drawings
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Selection FactorsSelection Factors
Intended useIntended use Exact nameExact name Lifetime costLifetime cost Potential operating savingsPotential operating savings Direct purchaseDirect purchase Demonstration modelsDemonstration models Equipment programsEquipment programs Custom FFECustom FFE New vs. usedNew vs. used
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Selection Factors, Cont.Selection Factors, Cont.
VersatilityVersatility CompactnessCompactness CompatibilityCompatibility AppearanceAppearance Brand nameBrand name PortabilityPortability Ease of cleaningEase of cleaning Ease of maintenanceEase of maintenance Degree of automationDegree of automation Availability of replacement partsAvailability of replacement parts
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Selection Factors, Cont.Selection Factors, Cont.
Supplier servicesSupplier services Employee attitude and skill levelEmployee attitude and skill level Energy sourceEnergy source Excess capacityExcess capacity Add-on capabilitiesAdd-on capabilities WarrantyWarranty Code complianceCode compliance
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The Purchase of FFEThe Purchase of FFE
CashCash Installment CreditInstallment Credit
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Copyright ©2008 John Wiley & Sons, Inc.