Question

Q 9.1: When can interest be included in the acquisition cost of a plant asset?A : during the construction period of a self-constructed asset B : when the asset is purchased on credit C : when the asset acquisition is financed by a long-term note payable D : when it is a part of a lump-sum purchase

Answer 1

Answer:

A : during the construction period of a self-constructed asset

Explanation:

The only interest that will be included in cost of an asset is called Borrowing Cost.Borrowing Costs are included in the cost of an Asset in terms of IAS16. Borrowing Costs are incurred during the construction period of a self-constructed asset.

Answer 2

Answer: A during the construction period of a self-constructed asset.

Explanation: Self constructed asset is a term used in financial accounting, it refers to those built by a company and it appears in its balance sheet . Self constructed asset cost would include the direct cost in labor and material associated with its construction.

Interest can be included in the acquisition cost of a plant asset "during the construction period of self constructed asset "