Required: Determine the cost of the development project that should be capitalized.

Q: Which of the following is an advantage of using the payback period method for project selection?…

A: The objective of the question is to identify the advantage of using the payback period method for…

Q: How can we determine the period necessary to recover both the capitalinvestment and the cost of…

A: The Payback period (PBP) determines how long it would take a company to recover the investment. PBP…

Q: Project cost are capitalized  but period costs are expensed

A: Project costs are costs incurred to build assets of enduring nature.

Q: Which of the following is a must-have requirement to be able to prepare construction project cash…

A: The term "project cash flow" describes the inflow and outflow of funds from an organization in…

Q: When evaluating capital projects, the following cost and revenues must be taken in consideration:…

A: When evaluating capital projects, the correct approach is to consider only relevant costs and…

Q: Which of the following is a criterion for a capital expenditure? a.It should increase the…

A: Capital Expenditure: It is the amount that a company spends on the development of machinery,…

Q: Which of the following items is irrelevant in determining the relevant cost of acquisition in…

A: Capital budgeting: capital budgeting is a decision making method done by management accountants in…

Q: Can we use benefit-cost analysis to choose among alternatives in allocating funds for building…

A: Cost-benefit analysis refers to a process a company uses to analyze its decisions. In a cost-benefit…

Q: What is the difference between VaR as it has been traditionally measured and stressed VaR? Explain…

A: A definition of value at risk is as follows: Value at Risk (VaR) is a metric that estimates the size…

Q: When valuing specific properties investors must consider?

A: Valuation of the real estate properties includes the estimation of the rental payments that are…

Q: Describe the process of using the Income-Tax Rate in Project Evaluation?

A: The income tax rate is used to determine the cash flow after tax. As cash flow after tax helps in…

Q: Determine the period necessary to recover both the capital investment and the cost of funds required…

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: The area of financial management that addresses the optimal choice for long term assets is

A: The long term assets are all such assets which are used by the company for more than one year and…

Q: Weighted average cost of capital (WACC) reflects the average cost of all capital components…

A: The Weighted Average Cost of Capital (WACC) represents a firm’s average after-tax cost of capital…

Q: Explain the uses, limitations and merits of the Payback Period compared to Net Present Value in…

A: The payback period method is a capital budgeting method for discovering the period in which the…

Q: Explain the conditions under which a company’s WACC is appropriate to use as   the cost of capital…

A: The WACC represents the overall cost of capital. It shows the average of all the capital costs in a…

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.