Asked by Angelique Cobilla on May 09, 2024
Verified
According to GAAP, interest cost incurred to finance construction of an asset must be capitalized in which of the following situations?
A) when the asset is inventory that is routinely manufactured in large quantities on a repetitive basis
B) when an asset is used in other than the earning activities of the firm
C) when an asset is ready for its intended use
D) when an asset is being constructed for a firm's own use
Interest Cost
The total cost of borrowing funds, typically expressed as a percentage of the borrowed amount, over the period of the loan.
Construction
Construction refers to the process of building, assembling, or creating infrastructure, buildings, and other physical structures through planning, design, and execution.
GAAP
Generally Accepted Accounting Principles, which are a set of accounting standards and principles used in the United States.
- Understand the principle of capitalized interest and its application in real-world scenarios.
Verified Answer
Learning Objectives
- Understand the principle of capitalized interest and its application in real-world scenarios.
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