Interest is capitalized when incurred in connection with the construction of plant assets because, during construction, the asset is not generating revenue
<h3>What is Interest?</h3>
This refers to the amount or rate that is added to a principal amount and this is usually done when a loan is collected.
Hence, we can see that when plant assets are being constructed, interest is capitalized and the main reason why this happens is that the asset is not generating revenue.
Furthermore, actual interest is the only thing that should be capitalized and this is because, during construction, the asset is not generating revenue and therefore companies should defer (capitalize) interest cost.
Thus, Interest is capitalized when incurred in connection with the construction of plant assets because, during construction, the asset is not generating revenue.
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Answer:
Budgeted cash collection in June=$110,300
Explanation:
Budgeted cash collection in June will be determined as follows:
<em>Month of sale collection</em>
= 25%×June sales = 25%× 100,000= 25,000
<em>Month following sales collection</em>
71%× May sales= 71% × 110,000 = 78,100
<em>Second month following sales collection</em>
4%× April Sales = 4%× 180,000= 7200
Budgeted cash collection in June= 25,000 + 78,100 + 7200
=110,300
Budgeted cash collection in June=$110,300
Answer:
2.68
Explanation:
Data provided in the question:
Reported net sales = $4,502,400
Reported net income = $1,510,000
Reported average total assets = $1,680,000
Now,
The the asset turnover is calculated using the formula as
Asset turnover = ( Net sales ) ÷ ( Average total assets )
or
Asset turnover = $4,502,400 ÷ $1,680,000
or
Asset turnover = 2.68 times
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