Interest costs are included in the cost of an asset in conjunction with
A)long-term assets being purchased.
B)long-term assets acquired for speculative purposes.
C)long-term assets being constructed.
D)natural resources and intangible assets.

Question

Quizplus · Accepted Answer

Interest costs are capitalized as part of the cost of a long-term asset that is being constructed. This is because the interest costs are directly related to the asset being constructed and can be attributed to the cost of the asset. Interest costs incurred for the purchase of long-term assets or for speculative purposes are generally expensed as incurred. Natural resources and intangible assets may also have interest costs capitalized as part of their cost, but this would depend on the specific circumstances of each individual asset.

Interest Costs Are Included in the Cost of an Asset