7. When does the period of interest capitalization begin?

A. When expenditures for the asset have been made.

B. When activities that are necessary to get it ready for its intended use are in progress

C. When interest cost is being incurred.

D. Only when all three of the above conditions are met.

8. The Greene Co. started using the dollar-value LIFO method of inventory in 2005, with ending inventory of $100,000. In 2006 the amount of inventory in base year dollars increased by $40,000. In 2007 the amount of inventory in base year dollars decreased by $30,000. Which of the following is true when computing the ending inventory for 2007.

A. The ending inventory for 12/31/2007 will consist of layers from 2005, 2006 and 2007

B. The ending inventory for 12/31/2007 will consist of layers from 2005 and 2007 only

C. The ending inventory for 12/31/2007 will consist of layers from 2005 and 2006 only

D. The ending inventory for 12/31/2007 will consist of only a 2007 layer

10.

The Fortuna Co. purchased a computer on 1/1/07 for $10,000. Annual depreciation on the asset was $1,000 per year. In 2010, the asset was sold for $5,000. Assume that the asset was sold on 10/1/10 instead of 1/1/10. What would be the gain or loss from the sale?

A. Loss of $2,000

B. Gain of $1,700

C. Gain of $1,250

D. Loss of $1,250

13. The Thompson Co. is building a ship for a customer and computed avoidable interest cost of $15,000 and actual interest cost of $12,000. What is the amount of interest that should be added to the cost of the ship?

A. 12000

B. 15000

C. 27000

D. 3000