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Leto [7]
3 years ago
9

When can interest be included in the acquisition cost of a plant asset?

Business
1 answer:
hammer [34]3 years ago
7 0

Answer:

a. during the the construction period of a self-constructed asset

Explanation:

"Determining the cost of constructing a new building is often more difficult. Usually this cost includes architect’s fees; building permits; payments to contractors; and the cost of digging the foundation. Also included are labor and materials to build the building; salaries of officers supervising the construction; and insurance, taxes, and interest during the construction period."

Reference: Porter, Debbie, and Tidewater Community College. “Principles of Accounting I.” Lumen, 2019,

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The initial cost of a packed-bed degassing reactor for removing trihalomethanes from potable water is $84,000. The annual operat
Thepotemich [5.8K]

Answer:

-$24,900

Explanation:

Solution

Given:

The annual payment is defined as:

A = F [i /(1 + i)^n -1

Where,

F = The sum of amount accumulated

i = The interest rate (annual)

n = the number of years

The standard notation equation becomes this

=A = F (A/F, i, n)

Now,

The annual payment  is A = P [ i(1 + i)^n / (1 + i)^n -1

where

P = The present value,

i = The interest rate (annual)

n = the number of year

The standard notation equation becomes this

=A = P (A/P, i, n)

We recall that,

The first cost P is $84,000.

Now,

A = $13,000, S = $9,000,  n = 10 years, and i = 8 %

Thus,

AW =- 84000 ( A/ P 8% 10 ) - 13000 + 9000 (A/F, 8%, 10)

=-84000 (0.149) - 13000 + 9000 (0.069)

= -$24,900

8 0
3 years ago
Sagon Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of September. Prio
Romashka [77]

Answer: Manufacturing overhead for the month was underapplied by $19,000.

Explanation:

From the question, we are informed that before the closing of the overapplied or underapplied balance to cost of goods sold, the total of the debits to the manufacturing overhead account was $75,000 and the total of the credits to the account was $56,000.

This implies that the manufacturing overhead for the month was underapplied by ($75000 - $56000)= $19000. The manufacturing overhead debit balance shows that manufacturing overhead was simply underapplied in this case.

6 0
3 years ago
Which of the following were reasons for wanting government control of the railroad and large production entities? economic gap b
kondaur [170]
The major reason that government control or regulation of railroads and large production entities because of monopolies. In the late 19th and early 20th centuries there was major growth in industries such as the railroad and oil industries in the United States, at this time companies became monopolies in these industries and thus there was pressure on the U.S. Government to weaken the control of these monopolies. 
3 0
3 years ago
Which of the following BEST describes a company's proper liquidity management?
Naddika [18.5K]

Answer:

A. Liquidity management is a balancing act, managers try to find liquidity levels that are neither too high not too low.

Explanation:

Maintaining proper liquidity is an important financial objective of management. Proper liquidity management demands that an entity should be able to meet his short term financial obligation and making sure that liquid assets of the entity are not idle. In order to achieve this, the best way to go is to maintain a level that is neither too high and not too low. Not too high means the entity is not holding too much cash or liquid assets than it currently need to meet its short term financial obligation.

For example, not keeping too much cash in current account but investing them in interest-earning investment assets.

Not too low means the cash or liquid assets held by an entity should not less than the amount needed to meet its short term financial obligation. For example, making sure that the entity has enough cash or readily convertible liquid assets that can be used to pay vendors, rent, interest and meet other short term financial obligation.

Option B is false because keeping too much does not help to maximize short term earnings which is a feature of proper liquidity management. Option C is wrong because there is no guideline to support that deferring coupon payment won`t attract payment and this does not connote proper liquidity management.

Option D is obviously false and does not describe proper liquidity management.

4 0
3 years ago
Read 2 more answers
You buy a share of The Ludwig Corporation stock for $21.70. You expect it to pay dividends of $1.00, $1.16, and $1.3456 in Years
Vesnalui [34]

Answer:

g = 16%

dividends yield:

Year 1 4.60%

Year 3: 4.78%

<u>expected rate of return: </u>

year 1 20.6%

year 3 20.78%

<u></u>

Explanation:

<u>grow rate:</u>

D1 /D0 = g

1.16/1.00 - 1 = 0.16

1.3456/1.16 - 1 = 0.16

the grow rate is 16%

<u>dividend yield:</u>

dividends/stock price =  dividend yield

1/21.7 = 0,0460 = 4.60%

1.3456/28.15 = 0,04780 = 4.78%

<u>expected rate of return: </u>

dividend yield + grow rate

4.60% + 16% = 20.6%

4.78% + 16% = 20.78%

8 0
3 years ago
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