The period of time during which capitalization of interest begins and when capitalization of interest ends is Group of answer choices From the time the first expenditures are incurred and funds have been borrowed until the asset is substantially complete and ready for its intended use. From the time funds are borrowed until the asset is substantially complete and ready for its intended use. From the time the first expenditures are incurred until no further interest cost is being incurred From the time the first expenditures are incurred until activities necessary to get the asset for its intended use have begun.

The period of time during which capitalization of interest begins and when capitalization of interest ends is Group of answer choices From the time the first expenditures are incurred and funds have been borrowed until the asset is substantially complete and ready for its intended use. From the time funds are borrowed until the asset is substantially complete and ready for its intended use. From the time the first expenditures are incurred until no further interest cost is being incurred From the time the first expenditures are incurred until activities necessary to get the asset for its intended use have begun.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter10: Long-lived Tangible And Intangible Assets

Section: Chapter Questions

Problem 4Q

See similar textbooks

Similar questions

In interest capitalization related to self constructed assets, all of the following must occur before the capitalization window begins except: A.Expenditures for the assets have been incurred B.Depreciation of the asset being built has been recognized C.Activities that are necessary to get the asset ready for its intended use are in progress D.Interest has to be incurred
Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset? Interest cost is being incurred. Expenditures for the assets have been made. The interest rate is equal to or greater than the company's cost of capital. Activities that are necessary to get the asset ready for its intended use are in progress.
Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset? A) Activities that are necessary to get the asset ready for its intended use are in progress. B) The interest rate is equal to or greater than the company's cost of capital. C) Interest cost is being incurred. D) Expenditures for the assets have been made.
GAAP provides guidelines for the inclusion of interest in the initial cost of a self-constructed asset.Required:1. What assets qualify for interest capitalization? What assets do not qualify for interest capitalization?2. Over what period should interest be capitalized?3. Explain average accumulated expenditures.4. Explain the two methods that could be used to determine the appropriate interest rate(s) to be used in capitalizing interest.5. Describe the three steps used to determine the amount of interest capitalized during a reporting period
What is the purpose of charging depreciation in financial statements? A To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use B To ensure that funds are available for the eventual replacement of the asset C To reduce the cost of the asset in the statement of financial position to its estimated market value D To account for the ‘wearing-out’ of the asset over its life
Which statements are correct concerning measurement of cost of property, plant and equipment?I. The purchase price of an item of property, plant and equipment is the cash price equivalent at the date of recognitionII. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and total payment is recognized as interest expense over the life of the asset.III. If an item of property, plant and equipment is acquired in exchange for a nonmonetary asset or a combination of monetary and nonmonetary asset, the cost of such item is measured at fair value unless the exchange transaction lacks commercial substance or fair value of either asset received or given up is not reliably determinable.IV. If an entity is able to determine reliably the fair value of both the asset given up and asset received in an exchange, the fair value of the asset given up is used to measure the cost of asset received in exchange.
Net book value is Select one: a. Amount of which an asset is recognized in the balance sheet after deducting any accumulated depreciation. b. Net amount which the entity expects to obtain for an asset at the end of its useful life. c. Amount of cash or cash equivalent paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction. d. Cost of an asset or the amount substituted for cost in the financial statements, less its residual value
The cost of property acquired by direct cash purchase includes the cash paid and: A. the implied interest on the debt to finance the purchase.B. the market value of any noncash asset surrendered to acquire the asset.C. the estimated residual value of the asset.D. directly attributable costs of bringing the asset to working condition for its intended use.
When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be? A) multiplied by an appropriate interest rate to determine the amount of interest to be capitalized. B) offset against interest cost incurred during construction. C) recognized as revenue of the period. D) used to reduce the cost of assets being constructed.
The purpose of the depreciation adjustment is to: -spread the cost invested in an asset over its useful life. -show the current market value of the asset. -set up a reserve fund for purchasing a new asset. -expense the full amount of the asset in the year purchased.
According to IAS 16 Property, Plant and Equipment, which, if any, of the following statements about depreciation are correct? The main purpose of depreciation is to reflect the fall in value of an asset over its useful life When an asset is revalued, subsequent depreciation relating to the amount of the revaluation should be debited to the revaluation surplus rather than to the income statement The provision for depreciation ensures that there are funds available to replace an asset when this becomes necessary, though in times of inflation, additional amounts may need to be set aside A change in depreciation method constitutes a change in accounting policy and must be accounted for as such
According to IAS 16 Property, Plant and Equipment, which, if any, of the following statements about depreciation are correct? The main purpose of depreciation is to reflect the fall in value of an asset over its useful life When an asset is revalued, subsequent depreciation relating to the amount of the revaluation should be debited to the revaluation surplus rather than to the income statement The provision for depreciation ensures that there are funds available to replace an asset when this becomes necessary, though in times of inflation, additional amounts may need to be set aside A change in depreciation method constitutes a change in accounting policy and must be accounted for as such A (1) and (4) B (2) and (3) C (4) only D None of the statements is correct