Which of the Following Assets Do Not Qualify for Capitalization

question 9

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 a company'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:

Operating Activities

The day-to-day actions that involve the production, sales, and delivery of a company's product or service, generating most of the company's cash flows.

Price/Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, indicating the dollar amount investors will pay for $1 of earnings.

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.

Global Event Factors

External events and developments that can influence financial markets and economic conditions worldwide, including political, environmental, and economic changes.