The Following Information Pertains to Equipment Constructed by a Firm

question 45

Multiple Choice

The following information pertains to equipment constructed by a firm for its own use.The construction is finished. $$\begin{array} {| l | l | } \hline \text { Materials used in construction } & \$ 40,000 \\\hline \text { Labour cost during construction } & 20,000 \\\hline \text { Fringe benefits on above labour } & 5,000 \\\hline \text { Incremental overhead due to Construction } & 8,000 \\\hline \begin{array} { l } \text { Interest expense on debt during Construction (assume this meets the requirements for } \\\text { interest capitalization) }\end{array} & 4,000 \\\hline\end{array}$$ The market value of the equipment immediately after construction was completed was $65,000.What is the loss on construction incurred by the firm?

• A)$0
• B)$12,000
• C)$8,000
• D)$5,000
• E)$4,000

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