1.Calculation of the amount of interest to capitalize on self constructed operat

Question

1.Calculation of the amount of interest to capitalize on self constructed operational assets during the construction period is based only on the:(A)Cash amount of interest expense during the construction period. (b)cost of borrwing to directly finance the construction (c)Average cost of borrowing to directly finance the construction plus the average cost of other interest bearing debt (d)Average cost of all borrowing, including dividends paid on preferred stock.

2.Choose the correct statement about the accounting treatment for xpecial one time assessments made by local governments requiring a firm to pay for improvements, including streetlights, sewers, and other infrastructure.(a)They are capitalized but not depreciated (b)they are expensed as incurred (c)If probable and estimable, they are expensed when determinable (4)They are capitalized and depreciated over their useful life.

Explanation / Answer

Answer to 1.

(A)Cash amount of interest expense during the construction period

Answer to 2.

(b)they are expensed as incurred

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