ACC 304 help A Guide to career/Snaptutorial ACC 304 help A Guide to career/Snaptutorial | Page 73

38. Construction of a qualifying asset is started on April 1 and
finished on December 1. The fraction used to multiply an expenditure
made on April 1 to find weighted-average accumulated expenditures
is
a. 8/8.
b. 8/12.
c. 9/12.
d. 11/12.
39. When funds are borrowed to pay for construction of assets
that qualify for capitalization of interest, the excess funds not needed
to pay for construction may be temporarily invested in interest-
bearing securities. Interest earned on these temporary investments
should be
a. offset against interest cost incurred during construction.
b. used to reduce the cost of assets being constructed.
c. multiplied by an appropriate interest rate to determine the amount
of interest to be capitalized.
d. recognized as revenue of the period.
40.
Interest cost that is capitalized should
a. be written off over the remaining term of the debt.
b. be accumulated in a separate deferred charge account and written
off equally over a 40-year period.