10. A firm reveals that \"interest is capitalized to construction in progress\"
ID: 2799270 • Letter: 1
Question
10. A firm reveals that "interest is capitalized to construction in progress" and goes on capitalized along with related depreciation amounts. A A) decrease interest expense by the amount of interest that had B) deduct interest that had been capitalized from fixed assets on the C) add interest that had been capitalized to Cash Flow f to reveal the amounts diligent analyst making adjustments would: n capitalized balance sheet from Operating activities 11. Brownfield Company reports the following information about one of its assets: Carrying Value of Equipment (Net Book Value) Undiscounted expected future cash flows Present Value of expected future cash flows Fair Value Value in Use Selling Costs $800,000 $825,000 $795,000 $790,000 $785,000 $30,000 Which of the following statements is most likely true? A) If Brownfield reports under IFRS, they will determine that the asset is impaired. B) If Brownfield reports under GAAP, they will determine that the asset is impaired. C) Under both IFRS and GAAP, Brownfield will determine that the asset is impaired. 12. A company issues a bond at par. At issuance, the proceeds of the bond issue A) B) C) represent a cash inflow in the financing section of the firm's statement of cash flows represent a cash inflow in the operating section of the firm's statement of cash flows represent a cash outflow in the financing section of the firm's statement of cash flowsExplanation / Answer
10. Answer A - Interest expenses need to be reduced to the amount of interest which has be capitalized to construction work in progress.
11. Answer C-asset is impaired under both IFRS and GAAP
12. Answer A- it is a cash inflow which is shown as financing activity
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