Question

When can interest be included in the acquisition cost of a plant asset?

A : during the construction period of a self-constructed asset
B : when the asset is purchased on credit
C : when the asset acquisition is financed by a long-term note payable
D : when it is a part of a lump-sum purchase

Answer 1

a. during the the construction period of a self-constructed asset

Step-by-step explanation:

"Determining the cost of constructing a new building is often more difficult. Usually this cost includes architect’s fees; building permits; payments to contractors; and the cost of digging the foundation. Also included are labor and materials to build the building; salaries of officers supervising the construction; and insurance, taxes, and interest during the construction period."

Reference: Porter, Debbie, and Tidewater Community College. “Principles of Accounting I.” Lumen, 2019,