Reading 36: Long-Lived Assets - LOS a ～ Q1-2 assets, related, company, required, interest

mayanfang1

Q1. Capitalizing interest costs related to a company’s construction of assets for its own use is required by:

A)   IFRS only.

B)   both IFRS and U.S. GAAP.

C)   U.S. GAAP only.

Q2. Capitalized interest costs are typically reported in the cash flow statement as an outflow from:

A)   operating.

B)   investing.

C)   financing.

.

mayanfang1

答案和详解如下：

Q1. Capitalizing interest costs related to a company’s construction of assets for its own use is required by:

A)   IFRS only.

B)   both IFRS and U.S. GAAP.

C)   U.S. GAAP only.

Correct answer is B)         

Both U.S. GAAP and IFRS require companies to capitalize the interest that accrues during a the construction of capital assets for their own use.

Q2. Capitalized interest costs are typically reported in the cash flow statement as an outflow from:

A)   operating.

B)   investing.

C)   financing.

Correct answer is B)         

Capitalized interest costs are reported as CFI on the statement of cash flows, as they are treated as part of the cost of the constructed capital asset.

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