According to GAAP, interest cost incurred to finance construction of an asset must be capitalized in which of the following situations? when an asset is ready for its intended use when the asset is inventory that is routinely manufactured in large quantities on a repetitive basis when an asset is being constructed for a firm's own use when an asset is used in other than the earning activities of the firm

According to GAAP, interest cost incurred to finance construction of an asset must be capitalized in which of the following situations? when an asset is ready for its intended use when the asset is inventory that is routinely manufactured in large quantities on a repetitive basis when an asset is being constructed for a firm's own use when an asset is used in other than the earning activities of the firm

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

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Question Content Area According to GAAP, interest cost incurred to finance construction of an asset must be capitalized in which of the following situations? when an asset is ready for its intended use when the asset is inventory that is routinely manufactured in large quantities on a repetitive basis when an asset is being constructed for a firm's own use when an asset is used in other than the earning activities of the firm
Interest costs related to which of the following types of assets qualify for interest capitalization? An asset a company manufactures and sells on a routine basis. An asset ready for its intended use at the time of purchase. An asset a company constructs as a discrete project for sale or lease, or an asset a company constructs for its own All of the above
Which one of the following is an essential characteristic of an asset? A. The inflow of future economic benefits is controlled by the enterprise B. It must be exclusively owned and must be exchangeable C. The cost of the asset can be measured accurately D. It is a result of either a past or predictable transaction or activity
Which of the following values for an intangible asset would a company capitalize and amortize? a.) purchase price b.) research costs c.) residual value d.) development costs
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.
Explain the historical cost concept as it applies to long-term operational assets. Why is the book value of an asset likely to be different from the current market value of the asset?
Which of the following are criteria for determining whether to record an asset as a fixed asset? Group of answer choices A. must be an investment and long lived B. must be long lived and used by the company in its normal operations C. must be short lived and tangible D. must be tangible and an investment
Under IFRS, a company that acquires an intangible asset may use the revaluation model for subsequent measurement only if a. The useful life of the intangible asset can be readily determined. b. An active market exists for the intangible asset. c. The cost of the intangible asset can be measured reliably. d. The intangible asset is a monetary asset.
What costs are included in determining the total cost of an asset? Why would a company include more than just the purchase price of an asset?
Intangible Assets Product development costs represent a considerable expenditure for companies. They are either written off as expense or capitalized as assets. Required: a. Discuss the conceptual issues and the definition of an asset that may be applied in determining whether development expenditure should be treated as an expense or an asset.
In which of the following situations would a cost incurred after an asset’s acquisition be capitalized? A.The useful life of the asset is increased. B.The amount of the expenditure must be immaterial. C.The expenditure is necessary to maintain the working order of the asset. D.There is no increase in the useful life of an asset.
An entity that acquires an intangible asset may use the revaluation modelfor subsequent measurement only if A. The useful life of the intangible asset can be reliably determined.B. An active market exists for the intangible asset.C. The cost of the intangible asset can be measured reliably.D. The intangible asset is a monetary asset.