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c. not be written off until the related asset is fully depreciated or
disposed of.
d. none of these.
S41. Which of the following is not a condition that must be satisfied
before interest capitalization can begin on a qualifying asset?
a. Interest cost is being incurred.
b. Expenditures for the assets have been made.
c. The interest rate is equal to or greater than the company's cost of
capital.
d. Activities that are necessary to get the asset ready for its intended
use are in progress.
S42. Which of the following is the recommended approach to
handling interest incurred in financing the construction of property,
plant and equipment?
a. Capitalize only the actual interest costs incurred during
construction.
b. Charge construction with all costs of funds employed, whether
identifiable or not.
c. Capitalize no interest during construction.
d. Capitalize interest costs equal to the prime interest rate times the
estimated cost of the asset being constructed.
S43. Which of the following nonmonetary exchange transactions
represents a culmination of the earning process?
a. Exchange of assets with no difference in future cash flows.