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Free_Kalibri [48]
3 years ago
13

When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not need

ed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be
a. offset against interest cost incurred during construction.
b. used to reduce the cost of assets being constructed.
c. multiplied by an appropriate interest rate to determine the amount of interest to be capitalized.
d. recognized as revenue of the period.
Business
1 answer:
balu736 [363]3 years ago
8 0

Answer:

d. recognized as revenue of the period.

Explanation:

As per general accounting principles, when amount is borrowed for construction of capital asset then the interest is capitalized as the asset qualifies for capitalization being a long term assets.

Sometimes the funds remain idle and that the funds are invested in some other source for income, which might be in the form of interest.

This basically is an income for the company, no matter what was the exact purpose of such funds.

Even though interest expense is to be capitalized but interest income is a revenue income.

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Option C. Greenwashing

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The reason is that the company has labelled its products with the green technology or environment friendly product, which it is not. So the perception of customers who buy environment friendly products are now not reluctant to purchase the company products who has deceived the people by saying that their product is environment friendly product. So the correct option is option C.

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tia_tia [17]

Answer:

To create the collar, the customer would: <u>buy 1 PHLX 59 SF Call and sell 1 PHLX 61 SF Call.</u>

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This should make the net cost of the collar to be close to zero due to the fact that the two contracts are "out the money" and also because the premium paid to buy the put is offset by the premium received when the call was sold.

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