33．Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.

Which of the following expenditures to build a new plant is least likely to be capitalized as property, plant, and equipment?

Select exactly 1 answers from the following:
A. Interest costs during construction.
B. Freight expenses incurred shipping new machinery to the plant.
C. Increases in the fair value of the plant assets during construction.
D. Personnel expenses incurred to install the new machinery before the plant begins operations.

答案和详解如下！

Feedback: Correct answer: C

The Analysis and Use of Financial Statements, 3rd edition, Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried (Wiley, 2003), pp. 228, 233?34

2006 Modular Level I, Vol. II, pp. 792, 797-799

Study Session 9-40-a

compute and describe the effects of capitalizing versus expensing on net income, shareholders?equity, cash flow from operations, and financial ratios and explain the effects on financial statements and the interest coverage ratio (times interest earned) of capitalizing interest costs, and explain the circumstances in which intangible assets, including software development costs and research and development costs, are capitalized

All costs incurred (invoice price, freight, installation) to make the asset ready for use must be capitalized. The interest on funds used for self-constructed assets during the construction period is also capitalized. Increases in the fair value of the plant assets are not recorded.

c

b