How Does the Treatment of Borrowing Costs Under U

question 2

Multiple Choice

How does the treatment of borrowing costs under U.S. GAAP differ from IFRS?

• A) U.S. GAAP has no guidance for accounting treatment related to borrowing costs.
• B) U.S. GAAP specifically includes foreign exchange gains and losses on foreign currency borrowings.
• C) The definition of borrowing costs under U.S. GAAP is broader in scope than the definition of interest cost under IAS 23.
• D) U.S. GAAP does not allow netting of interest income against interest cost.

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Definitions:

Dissaving

When consumption is greater than disposable income; negative saving.

APC

In economics, stands for Average Propensity to Consume, which is the fraction of income spent on consumption.

APS

The Average Propensity to Save, which is the fraction of total income that households save rather than spend on consumption.

APC

Stands for Average Propensity to Consume, which is the fraction of income that households spend on consumption rather than saving.