An asset is being constructed for an enterprise's own use. The asset has been financed with a specific new borrowing. The interest cost incurred during the construction period as a result of expenditures for the asset is * A. interest expense in the construction period. B. a part of the historical cost of acquiring the asset to be written off over the estimated useful life of the asset. C. a part of the historical cost of acquiring the asset to be written off over the term of the borrowing used to finance the construction of the asset. D. recorded as a deferred charge and amortized over the term of the borrowing.
An asset is being constructed for an enterprise's own use. The asset has been financed with a specific new borrowing. The interest cost incurred during the construction period as a result of expenditures for the asset is * A. interest expense in the construction period. B. a part of the historical cost of acquiring the asset to be written off over the estimated useful life of the asset. C. a part of the historical cost of acquiring the asset to be written off over the term of the borrowing used to finance the construction of the asset. D. recorded as a deferred charge and amortized over the term of the borrowing.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An asset is being constructed for an enterprise's own use. The asset has been financed with a specific new borrowing. The interest cost incurred during the construction period as a result of expenditures for the asset is *
A. interest expense in the construction period.
B. a part of the historical cost of acquiring the asset to be written off over the estimated useful life of the asset.
C. a part of the historical cost of acquiring the asset to be written off over the term of the borrowing used to finance the construction of the asset.
D. recorded as a deferred charge and amortized over the term of the borrowing.
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