Under Australian Accounting Standard AASB 123 'Borrowing Costs',interest on Borrowings

question 11

Multiple Choice

Under Australian Accounting Standard AASB 123 'Borrowing Costs',interest on borrowings should not be included as part of the cost:

• A) of a building intended to be leased for use by others
• B) of any asset
• C) of land being held for future building purposes
• D) of a building constructed for an entity's own use

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Definitions:

ABC

Activity-Based Costing, a method of allocating overhead and indirect costs to specific products or projects based on the activities that consume resources.

Traditional Costing System

A costing method used in manufacturing, which assigns indirect costs to products based on a predetermined overhead rate.

Company Profits

The financial gains made by a company after all expenses, taxes, and costs have been subtracted from total revenue.

Overhead Costs

Expenses associated with running a business that cannot be directly tied to a specific product or service, such as rent, utilities, and management salaries.