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2 years ago

Interest is capitalized when incurred in connection with the construction of plant assets because_______.

1 answer:

7 0

Interest is capitalized when incurred in connection with the construction of plant assets because, during construction, the asset is not generating revenue

<h3>What is Interest?</h3>

This refers to the amount or rate that is added to a principal amount and this is usually done when a loan is collected.

Hence, we can see that when plant assets are being constructed, interest is capitalized and the main reason why this happens is that the asset is not generating revenue.

Furthermore, actual interest is the only thing that should be capitalized and this is because, during construction, the asset is not generating revenue and therefore companies should defer (capitalize) interest cost.

Thus, Interest is capitalized when incurred in connection with the construction of plant assets because, during construction, the asset is not generating revenue.

Read more about interest capitalization here:

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A lump sum of $5,000 is invested at 10% per year for five years. The company's cost of capital is 8%. Which is true? The investm

irga5000 [103]

Answer:

The correct answer is B: The investment has a future value of $8,053

Explanation:

Giving the following information:

A lump sum of $5,000 is invested at 10% per year for five years. The company's cost of capital is 8%.

We need to calculate the final value of the investment. We will use the following formula:

FV= PV*(1+i)^n

FV= 5,000*1.10^5= $8,052.55

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3 years ago

On April 1, Sangvikar Company had the following balances in its inventory accounts:

noname [10]

Answer:

DR Raw Material Inventory $30,000

CR Accounts Payable $30,000

DR Work in Process Inventory $33,900

CR Raw Material Inventory $33,900

Working

= Job 114 + Job 115 + Job 116

= 16,500 + 12,400 + 5,000 = $33,900

DR Work in Process $‭7,430‬

CR Wages Payable $‭7,430‬

Working

= (150 * 15) + (220 * 17) + (80 * 18)

= $‭7,430‬

DR Work in Process $‭4,458‬

CR Manufacturing Overhead $‭4,458‬

Working

Overhead as % of Direct labor cost using Job 115 = Applied Overhead / Direct labor = 936/1,560 = 60%

Manufacturing Overhead = Overhead rate * Direct labor

= 60% * 7,430 = $‭4,458‬

DR Manufacturing Overhead $4,765

CR Accounts Payable $4,765

DR Finished Goods $‭23,520‬

CR Work in Process $‭23,520‬

Job 115 costs = Beginning + Material + Labor + Overhead

= (2,640 + 1,560 + 936) + 12,400 + (220 * 17) + (220 * 17 * 60%)

= $‭23,520‬

DR Cost of Goods sold $‭23,520‬

CR Finished Goods $‭23,520‬

DR Accounts Receivable $‭32,928‬

CR Cost of Goods sold $‭32,928‬

Working

= ‭23,520‬ * 140%

= $‭32,928‬

4 0

3 years ago

Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating incom

Pie

Answer:

ROI = Net operating income x 100

Average operating assets

ROI = $1,924,320 x 100

$6,000,000

ROI = 32.1%

The correct answer is C

Explanation:

ROI is the ratio of net operating income to average operating assets multiplied by 100.

7 0

3 years ago

A government deficit has increased from 30 to 50. The country's trade deficit is 100 and private savings equal 65 and investment

viva [34]

Answer:

If Ricardian neutrality holds true, after this change in the government's budget, private savings will equal 40.

Explanation:

S - I = X - M, where

S = Sp + Sg, where

Sp: private saving

Sg: Public saving = T - G

Sp + T - G - I = X - M

or,

Sp - I = (G - T) - (M - X) = Budget deficit - Trade deficit

Initially,

65 - 30 = 90 - 100 = - 10

When budget deficit falls to 50,

Sp - 90 = 50 - 100

Sp = - 50 + 90 = 40

Therefore, If Ricardian neutrality holds true, after this change in the government's budget, private savings will equal 40.

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3 years ago

1) When there is uncertainty in the marketplace, what happens to yield spreads and why?2) Why do venture capital companies often

Yuki888 [10]

Answer and Explanation:

1. When there is high uncertainty in the market, there will be high yield spreads. This is because the higher the risk the higher the profit or compensation for risk

2.preferred stock positions pay more consistent dividends that common stock positions and also pay higher than bonds.

3.Accelerated depreciation is depreciation method in accounting that deducts higher depreciation expenses in the early life of an asset therefore leaving the company to pay less taxes on these assets and more cash flow. Increased cash flow consequently encourages and leads to more investment

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3 years ago