How Should Borrowing Costs Relating to an Asset Being Constructed

question 19

Multiple Choice

How should borrowing costs relating to an asset being constructed over a substantial period of time be treated in the accounts?

• A) Expensed as incurred.
• B) Capitalised and amortised over the period of the construction of the asset.
• C) Accrued and amortised over the period of the loan.
• D) Capitalised as part of the cost of the asset.
• E) None of the given answers.

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Definitions:

Legal Definition

The explicit description or determination of a concept or term as outlined by legal statutes or jurisprudence.

Ambiguous

Relates to information or situations that are unclear, uncertain, or can be understood in more than one way.

Confusion

A state of mind in which a person finds it difficult to understand a situation or interpret information correctly.

Glass Escalator

A metaphor describing how men, particularly in female-dominated professions, often rise faster in rank or are paid more than their female counterparts.