1. Borrowing costs can be capitalized as part of the asset when(a) They are a qualifying asset and the entity has opted for thebenchmark treatment underIAS 23.(b) They are a qualifying asset; the entity has opted for theallowed alternative treatment under IAS 23, but it is not probablethat they will result in future economic benefits to the entity.(c) They are a qualifying asset; the entity has opted for the allowedalternative treatment under IAS 23, and it is probable that theywill result in future economic benefits to the entity, but the costscannot be measured reliably.(d) They are a qualifying asset; the entity has opted for theallowed alternative treatment under IAS 23, and it is probable thatthey will result in future economic benefits to the entity, but thecosts cannot be measured reliably.2. Which of the following may not be considered a "qualifyingasset" under IAS 23?(a) A power generation plant that normally takes two years toconstruct.(b) An expensive private jet that can be purchased from a localvendor.(c) A toll bridge that usually takes more than a year to build.(d) A ship that normally takes one to two years to complete.3. Which of the following costs may not be eligible forcapitalization as borrowing costs under IAS 23?(a) Interest on bonds issued to finance the construction of aqualifying asset.(b) Amortization of discounts or premiums relating to borrowingsthat qualify for capitalization.(c) Imputed cost of equity.(d) Exchange differences arising from foreign currencyborrowings to the extent they are regarded as an adjustment tointerest costs pertaining to a qualifying asset.4. Capitalization of borrowing costs(a) Shall be suspended during temporary periods of delay.(b) May be suspended only during extended periods of delays inwhich active development is delayed.(c) Should never be suspended once capitalization commences.(d) Shall be suspended only during extended periods of delays inwhich active development is delayed.5. Which of the following is not a disclosure requirement underIAS 23?(a) Accounting policy adopted for borrowing costs.(b) Amount of borrowing costs capitalized during the period.(c) Segregation of assets that are “qualifying assets" from otherassets on the balance sheet or as a disclosure in the footnotes tothe financial statements.(d) Capitalization rate used to determine the amount of borrowingcosts eligible forcapitalization. 1. A newly set up dot-com entity has engaged you as its financialadvisor. The entity has recently completedone of its highly publicized research and development projects andseeks your advice on the accuracy of the following statementsmade by one of its stakeholders. Which one is it?(a) Costs incurred during the "research phase" can be capitalized.(b) Costs incurred during the “development phase" can becapitalized if criteria such as technical feasibility of the projectbeing established are met.(c) Training costs of technicians used in research can becapitalized.(d) Designing of jigs and tools qualify as research activities.2. Which item listed below does not qualify as an intangible asset?(a) Computer software.(b) Registered patent.(c) Copyrights that are protected.(d) Notebook computer.3. Which of the following items qualify as an intangible assetunder IAS 38?(a) Advertising and promotion on the launch of a huge product.(b) College tuition fees paid to employees who decide to enroll inan executive M.B.A. program at Harvard University whileworking with the company.(c) Operating losses during the initial stages of the project.(d) Legal costs paid to intellectual property lawyers to register apatent.4. Once recognized, intangible assets can be carried at(a) Cost less accumulated depreciation.(b) Cost less accumulated depreciation and less accumulatedamortization.(c) Revalued amount less accumulated depreciation.(d) Cost plus a notional increase in fair value since the intangibleasset is acquired.5. Which of the following disclosures is not required by IAS 38?(a) Useful lives of the intangible assets.(b) Reconciliation of carrying amount at the beginning and the endof the year.(c) Contractual commitments for the acquisition of intangibleassets.

ANSWER 1 The correct answer is option D. Reason- Borrowing costs are capitalized as a part of the…

par (a) They are a qualifying asset and the entity has opted for the benchmark treatment under IAS 23. (b) They are a qualifying asset; the entity has opted for the allowed alternative treatment under IAS 23, but it is not probable that they will result in future economic benefits to the entity. (c) They are a qualifying asset; the entity has opted for the allowed alternative treatment under IAS 23, and it is probable that they will result in future economic benefits to the entity, but the costs cannot be measured reliably. (d) They are a qualifying asset; the entity has opted for the allowed alternative treatment under IAS 23, and it is probable that they will result in future economic benefits to the entity, but the costs cannot be measured reliably. 2. Which of the following may not be considered a "qualifying asset" under IAS 23? (a) A power generation plant that normally takes two years to construct. (b) An expensive private jet that can be purchased from a local vendor. (c) A toll bridge that usually takes more than a year to build. (d) A ship that normally takes one to two years to complete. 3. Which of the following costs may not be eligible for capitalization as borrowing costs under IAS 23? (a) Interest on bonds issued to finance the construction of a qualifying asset. (b) Amortization of discounts or premiums relating to borrowings that qualify for capitalization. (c) Imputed cost of equity. (d) Exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to interest costs pertaining to a qualifying asset.

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...