When May a Company Include Interest Cost as Part of the Cost

question 73

Multiple Choice

When may a company include interest cost as part of the cost of the asset?

• A)When they buy a piece of equipment and finance its acquisition by a bank loan.
• B)When they must borrow money to finance the manufacture of their inventory items.
• C)When they are self-constructing a piece of equipment they will use to manufacture their products,but only during the period of construction.
• D)Interest is never allowed to be capitalized.

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Definitions:

Executives

Executives are high-level managers or administrators in organizations, responsible for strategizing and decision-making to drive the company towards its goals.

Attention

The focused mental engagement on a particular item of information, object, or task, and the process of selectively concentrating on one aspect while ignoring others.

Divisional Profitability

A measurement of the financial performance of individual divisions or segments within a company, indicating their contribution to overall profit.

Coordination

The process of organizing people or groups so that they work together properly and well.