1. Which of the following is a qualifying asset? * A. Building that is ready for its intended use upon purchase B. An application software (intangible asset) that takes 3 years to develop C. Investment property measured at fair value D. Inventories that are routinely produced in large quantities in continuous basis
1. Which of the following is a qualifying asset? * A. Building that is ready for its intended use upon purchase B. An application software (intangible asset) that takes 3 years to develop C. Investment property measured at fair value D. Inventories that are routinely produced in large quantities in continuous basis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 1E: Inclusion in Property, Plant, and Equipment Guthrie Inc. must determine whether the following items...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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1. Which of the following is a qualifying asset? *
A. Building that is ready for its intended use upon purchase
B. An application software (intangible asset) that takes 3 years to develop
C. Investment property measured at fair value
D. Inventories that are routinely produced in large quantities in continuous basis
2. In which of the following instances is the capitalization of borrowing costs under PAS 23 would most likely be suspended? *
A. Construction is temporarily stopped for the curing of concrete.
B. Active development is stopped to give time for the engineers to reevaluate a design flaw.
C. The construction of a bridge is disrupted by troubled waters.
D. The construction of a building is discontinued because it is condemned by the government. The resumption of development is uncertain.
3. On January 1, 20x1, Entity A obtained a 12% ₱6,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income ₱180,000. The construction was completed on December 31, 20x1. How much borrowing costs are capitalized to the cost of the constructed building? *
A. 720,000
B. 0
C. 540,000
D. 480,000
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