1. According to PAS 23, borrowing costs do not directly relate to the acquisition, construction, or production of a qualifying asset are A. Capitalized as cost of the qualifying asset. B. Expensed C. Expensed, except when the borrowing costs relate to other assets D. Any of these as a matter of accounting policy choice
1. According to PAS 23, borrowing costs do not directly relate to the acquisition, construction, or production of a qualifying asset are A. Capitalized as cost of the qualifying asset. B. Expensed C. Expensed, except when the borrowing costs relate to other assets D. Any of these as a matter of accounting policy choice
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. According to PAS 23, borrowing costs do not directly relate to the acquisition, construction, or production of a qualifying asset are
A. Capitalized as cost of the qualifying asset.
B. Expensed
C. Expensed, except when the borrowing costs relate to other assets
D. Any of these as a matter of accounting policy choice
2. Which of the following is a qualifying asset?
A. A second-hand heavy machinery that takes 2 years to refurbish and customize for its intended use
B. Biological asset measured at fair value less costs to sell
C. A long-term note receivable (financial asset)
D. A multi-million-dollar executive jet plane that is ready for its intended use upon purchase
3. An entity starts the capitalization of borrowing costs to the cost of a qualifying asset when *
A. Expenditures for the asset are being incurred.
B. Borrowing costs are being incurred.
C. Activities necessary to prepare that asset for its intended use or sale are being undertaken.
D. All of the above conditions are met.
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