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Mazyrski [523]
3 years ago
10

Debt is frequently incurred when plant assets are acquired. For example, debt may be incurred on the purchase of plant assets. D

ebt may also be incurred during the construction of plant assets. How is the interest in these two cases treated for financial reporting?
Debt for purchase Debt during construction
expense capitalize
expense expense
capitalize capitalize
capitalize expense
Business
1 answer:
S_A_V [24]3 years ago
8 0

Answer: Expense capitalize

Explanation:

 The expense capitalize is the term which is used to refers to the capitalizing the given cost of the expenses based on their values for the purpose of evaluating all the expenses in the balance sheet.

The capitalize the expenses provide various types of benefits to the firms for obtaining the various types of updated assets that typically helps in providing the long term duration.

According to the given question, the interest in the given two cases is basically treat by expense capitalize for the purpose of financial reporting.

Therefore, Expense capitalize  is the correct answer.  

 

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Answer:

the project's MIRR is 13.84 %

Explanation:

MODIFIED INTERNAL RATE OF RETURN (MIRR)

-It is the rate that causes the Present Value of the Terminal Value (Future Cash flows at the end of the Project) to equal Present Value of Cash outflows.

-MIRR assumes a reinvestment rate at the end of the project

The First Step is to Calculate the Terminal Value at end of year 3.

Terminal Value (FV) = Sum of (PV x (1 + r) ^ 3 - n)

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                   = $534.65 + $490.50 + $450.00

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The Next Step is to Calculate the MIRR using a Financial Calculator :

(-$1,000)          CFj

0           CFj

0           CFj

$1,475.15   CFj

Shift IRR/Yr 13.84 %

Therefore, the project's MIRR is 13.84 %.

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