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Mazyrski [523]
2 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]2 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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Hairston Industries has $5 million of debt and $20 million of equity. If Hairston's beta is currently 1.75 and its tax rate is 4
nasty-shy [4]

Answer:

The un levered beta ( bu) of the company is 1.52

Explanation:

Given information -

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Debt (D) - $5 million

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D / E ( Debt to Equity ratio ) = $ 5 million / $20 million = .25

Formula for taking out un levered beta ( bu) is -

Beta levered ( bl ) = Beta un levered ( bu ) [1 + (1 - T ) D / E ]

1.75 = bu [1 + (1 - 40% ) .25

1.75 = bu [1 + .6 x .25 ]

1.75 = bu [ 1 + .15 ]

1.75 = bu [ 1.15 ]

bu = 1.75 / 1.15

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7 0
3 years ago
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Answer:

The answer is: $2,500

Explanation:

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Since Jack and Diane aren't able to determine the depreciation expenses for the cabinets, they should use their fair market value as cost basis.

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