Which of the Following Assets Do Not Qualify for Capitalization

question 58

Multiple Choice

Which of the following assets do not qualify for capitalization of interest costs incurred during construction of the assets?

• A)Assets under construction for an enterprise's own use.
• B)Assets intended for sale or lease that are produced as discrete projects.
• C)Assets financed through the issuance of long-term debt.
• D)Assets not currently undergoing the activities necessary to prepare them for their intended use.

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Definitions:

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) are a set of accounting standards and procedures used in the United States to ensure financial information is consistent and transparent.

Agricultural Commodities

Agricultural commodities include products derived from farming such as grains, livestock, and other food products often traded in financial markets.

Completed-transaction Method

A method of recognizing revenue only when all activities related to a transaction are completed.

GAAP

Generally Accepted Accounting Principles, a set of rules and guidelines that companies follow to ensure their financial statements are consistent and transparent.