If a Company Constructs an Asset Over a Period of Time

question 9

Multiple Choice

If a company constructs an asset over a period of time and borrows money,the amount of interest incurred during construction on the borrowed money is

• A)capitalized as part of the cost of the plant asset.
• B)amortized over the construction period.
• C)reported as interest expense on the income statement.
• D)reported as depletion on the income statement.

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Definitions:

Pedipalps

Appendages located near the mouth of arachnids, such as spiders, used for feeding and sometimes reproduction.

Jointed Appendages

Limbs or structures in certain organisms, like arthropods, that are segmented and connected by joints, allowing for complex movement.

Annelids

A phylum of invertebrate worms characterized by segmented bodies and includes earthworms, ragworms, and leeches.

Closed Circulatory System

A cardiovascular system in which the blood is contained within blood vessels and circulates entirely within the body, separate from the body’s interstitial fluid.