According to GAAP, Interest Must Be Capitalized for

question 85

Multiple Choice

According to GAAP, interest must be capitalized for

• A)assets that are ready for use
• B)assets constructed for a firm's own use
• C)assets that are not being used in the earning activities of the company
• D)inventories that are produced in large quantities on a repetitive basis

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Definitions:

Consolidation Entry

An accounting record that combines the financial statements of two or more merged or acquired companies.

Investment in Thompson Co.

A specific line item in financial statements or records indicating the amount of money allocated towards the purchase of stakes or securities in Thompson Co. by an investor or another company.

Accrual of Earnings

The accrual of earnings refers to the recognition of revenues and expenses when they are earned or incurred, regardless of when cash transactions occur.