EXPLAIN WHY (please)

The two important accounting issues related to self-constructed assets are

Multiple select question.

• allocation of overhead.
• residual value.
• date placed in service.
• treatment of interest charges.

A company issues its equity securities to purchase land. The common stock is not publicly traded. The best indicator of fair value is the

• estimated value of the stock.
• appraised value of the land.

For self-constructed assets, the costs incurred include labor, materials, and

• operating costs.
• depreciation expense.
• research and development.
• overhead.

When a company receives an asset from an unrelated party by a donation, the assets are valued at fair value and

• a gain is recorded.
• revenue is recorded.
• paid-in capital is increased.
• a liability is increased.

When assets are exchanged and the transaction lacks commercial substance, the asset received is valued at the

• fair value of the asset received.
• book value of the asset given up.
• fair value of the asset given up.
• net present value of the asset given up.

Which items qualify for interest capitalization? (Select all that apply.)

Multiple select question.

• Purchased assets
• Assets built as discrete projects for sale or lease
• Inventories routinely manufactured in large quantities
• Franchise agreements
• Assets built for a company's own use

An asset is exchanged for another asset and cash is received in the transaction. The fair value of the assets are not determinable. At what amount should the new asset be recorded?

• Book value of the asset given up less the cash received.
• Book value of the asset received less the cash received.
• Cash received plus the book value of the asset given up.
• Historical cost of the asset given up less the cash received.

The two important accounting issues related to self-constructed assets are

• interest charges and allocation of overhead.
• allocation of overhead and depreciation rates.
• historical cost and useful life.
• interest charges and date placed in service.

The interest capitalization period begins with the first expenditure and ends when which of the following occur? (Select all that apply.)

• the asset is substantially complete and ready for use
• the construction project is subcontracted to another party
• interest costs are no longer being incurred
• the loan is paid off at the end of the asset's life

What are the cost components for self-constructed assets? (Select all that apply.)

Multiple select question.

• direct material
• operating expenses
• direct labor
• manufacturing overhead

Assets that do not qualify for interest capitalization are

• assets constructed as a discrete project for sale or lease.
• inventories routinely manufactured.
• assets built for a company's own use.