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Assets Constructed for a Firm's Own Use Present the Problem

question 74

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Assets constructed for a firm's own use present the problem of whether to capitalize interest on the funds invested during the time required to prepare the assets for their intended use.Current generally accepted accounting principles as specified by the FASB in Statement No.34 require the capitalization of interest on borrowed capital,but not to exceed the total interest paid by the firm.
Evaluate the appropriateness of the approach currently required in the professional pronouncements now in effect.


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