2 When interest of self-constructed building is capitalized, the following state

Question

2 When interest of self-constructed building is capitalized, the following statement is true a. Asset on balance sheet will be lower b. Net income on income statement will be lower c. Net income on income statement will be higher, and asset on balance sheet will higher d. None of the above 13. On February 1, 2014, Nelson Corporation purchased a parcel of land as a factory site for $280,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2014. Costs incurred during this period are listed below: Demolition of old building $ 20,000 Architect's fees 35,000 Legal fees for title investigation and purchase contract 5,000 Construction costs 1,340,000 (Salvaged materials resulting from demolition were sold for $10,000.) Nelson should record the cost of the land and new building, respectively, as a $305,000 and $1,365,000. b. $290,000 and $1,380,000 c. $290,000 and $1,375,000 d. $295,000 and $1,375,000. 14. Worthington Chandier Company purchased equipment for $36,000. Sales tax on the purchase was $2,400. Other costs incurred were freight charges of $600, repairs of $350 for damage during installation, and installation costs of $675. What is the cost of the equipment? a. 536,000 b. $38,400 c. $39,675 d.$40,725 15. When an exchange of nonmonetary assets results a loss, the loss should be a, always recognized h. recognized only if the exchange has commercial substance. c. recognized only if the exchange has no commercial substance. d, none of the above 16. If an exchange has commercial substance, the transaction must a change future cash flow h change future earnings c. change assets d. change equities

Explanation / Answer

Answer Question Number 12

When Interest on self constructed asset is capitalized, than
Net Income on income statement will be higher, and asset on balance sheet will be higher.
So the right answer is point (C)

Explanation
When we capitalized an asset, means increase in the value of assets, and adding interest expense to asset, which means our income statement will get higher because we are eliminating an expense form income statement..

As per Chegg policy when more than one unrelated qusetions are asked than we have to answer only one question, so please don’t mind and ask separate question.

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