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:

brainly.com/question/417585

#SPJ1

You might be interested in

use the concepts of gross and net investment to distinguish between an economy that has a rising stock of capital and one that h

Goryan [66]

Gross investment can be zero but never negative because it is the investment in the capital stock.

<u>Explanation:</u>

Gross investment in a country is the amount that has been spent by the economy on the fixed assets of the economy in a given period of time. It is the addition done to the total capital stock of the country in a particular period of time.

So this shows that it can be zero meaning that no amount is spent on the addition of the capital stock in a particular period of time but it can never be negative.

5 0

3 years ago

Reuter Bank loaned Sabean Corporation $500,000 in

hammer [34]

Answer:

C) I, II, and III only.

I. May demand payment of the full amount immediately from the sureties when the corporation defaults on the loan.
II. May demand payment of the full amount immediately from the sureties even if Reuter does not attempt to recover any amount from the collateral.
III. May attempt to recover up to $200,000 from the collateral and the remainder from the sureties, even if the remainder is more than $300,000.

Explanation:

The bank has several options in this case, depending on the financial position and net worth of the sureties and the corporation. It can decide to collect all the debt directly from them, or collect part of the debt through the collateral property, or it can go after the assets of the corporation, or any type of combination. In this case the bank has three options from which it can collect the debt and it is up to them to decide how they proceed.

4 0

4 years ago

Comparative advertising is one form of __________ advertising.

tamaranim1 [39]

Comparative advertising is one form of product advertising.

8 0

3 years ago

Operations and supply chain management is concerned with the design and management of the entire system that has what function?

Vladimir79 [104]

The function that they had is <span>Produces a product or delivers a service. Supply chain management is a complex system that organizes the flow of goods and services.
The main purpose in creating this supply chain is to make sure that the company will be able to deliver their selling products to as many potential consumers as possible</span>

4 0

3 years ago

T or F as a general tule the greater the risk the lower the potential return in an investment

artcher [175]

Answer:

false

Explanation:

hope this helps:)

7 0

2 years ago

Read 2 more answers