350_Fall_2009_Quiz_8_Solution

350_Fall_2009_Quiz_8_Solution - 1. _A_ Assets that qualify...

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1. __A_____ Assets that qualify for interest cost capitalization include a. assets under construction for a company's own use. b. assets that are ready for their intended use in the earnings of the company. c. assets that are not currently being used because of excess capacity. d. All of these assets qualify for interest cost capitalization. 2. __C_____ When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to a. the total interest cost actually incurred. b. a cost of capital charge for stockholders' equity. c. that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made. d. that portion of average accumulated expenditures on which no interest cost was incurred. 3. __B_____ 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.
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This note was uploaded on 02/03/2012 for the course ECON 301 taught by Professor Staff during the Spring '08 term at Washington State University .

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350_Fall_2009_Quiz_8_Solution - 1. _A_ Assets that qualify...

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