Final answer:
The cost to construct a plant does include contract price, architect's fees, building fees, and excavation costs. Interest costs, under GAAP, are capitalized only during the construction period. Once the asset is ready for its intended use, further interest cost is expensed. The correct answer is a. True.
Step-by-step explanation:
The student's question relates to what costs are included in the construction of a plant for financial accounting purposes. According to accounting principles, costs that can be directly attributed to the construction of the plant, such as the contract price, architect's fees, building fees, and excavation costs, are typically capitalized as part of the property, plant, and equipment (PP&E).
However, interest costs incurred to finance the project are usually treated differently. Under the Generally Accepted Accounting Principles (GAAP), interest costs can be capitalized during the construction period of a qualifying asset, but once the asset is ready for its intended use, further interest cost is expensed. Therefore, if the question implies that interest costs are not included at any point, it is false. However, if it is suggesting that interest costs are not included after the asset is ready for use, then it is true. So, the correct answer is a. True.