An Asset Is Being Constructed for an Enterprise's Own Use

question 67

Multiple Choice

An asset is being constructed for an enterprise's own use.The asset has been financed with a specific new borrowing.The interest cost incurred during the construction period as a result of expenditures for the asset is

• A) a part of the historical cost of acquiring the asset to be written off over the estimated useful life of the asset.
• B) interest expense in the construction period.
• C) recorded as a deferred charge and amortized over the term of the borrowing.
• D) a part of the historical cost of acquiring the asset to be written off over the term of the borrowing used to finance the construction of the asset.

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Definitions:

Transfer Right

The legal ability to transfer an ownership interest or right from one party to another.

Assignment of Rights

The transfer of rights, title, and interest from one party to another, often in a contract or agreement.

Delegation of Duties

Delegation of duties involves assigning responsibility and authority from one person to another for the completion of specific tasks or roles.

Assigns Contract

Refers to the transfer of rights or duties under a contract from one party to another.