When Capitalizing the Cost of a Purchased Asset, All of the Following

question 35

Multiple Choice

When capitalizing the cost of a purchased asset, all of the following cost should be included in capitalization except for:

• A)the full purchase price plus any discounts
• B)set up costs
• C)legal costs
• D)shipping costs

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Definitions:

Fixed Assets Turnover Ratio

A financial metric that measures a company's ability to generate sales from its fixed assets, such as property, plant, and equipment.

EPS

Earnings Per Share, a financial metric indicating the portion of a company's profit allocated to each outstanding share of common stock.

Optimal Capital Structure

The best mix of debt, preferred stock, and common equity financing that maximizes a company's stock price while minimizing its cost of capital.

Earnings Per Share

A financial ratio indicating the amount of profit attributed to each outstanding share of common stock.