16 ) The retail inventory method is based on the assumption that the 17 ) In 2006 , Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $ 700,000 . Before the December 31 , 2006 balance sheet date , the market price for these materials dropped to $ 510,000 . The journal entry to record this situation at December 31 , 2006 will result in a credit that should be reported 18 ) The gross profit method of inventory valuation is invalid when 19 ) Which of the following is NOT a major characteristic of a plant asset ? 20 ) The cost of land does NOT include 21 ) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot , the proper accounting treatment of the cost of the building would depend on 22 ) To be consistent with the historical cost principle , overhead costs incurred by an enterprise constructing its own building should be 23 ) When computing the amount of interest cost to be capitalized , the concept of " avoidable interest " refers to 24 ) The period of time during which interest must be capitalized ends when 25 ) 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 26 ) 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 27 ) When a plant asset is acquired by issuance of common stock , the cost of the plant asset is properly measured by the 28 ) If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset , factory machinery , the credit to accumulated depreciation from period to period during the life of the firm will 29 ) The term " depreciable cost ," or " depreciable base ," as it is used in accounting , refers to