Question Details

(Solution) - In FASB Statement No 34 the FASB called for the capitalization

Brief item decscription

Solution download


Item details:

In FASB Statement No.34, the FASB called for the capitalization of interest costs associated with projects involving the construction or development of assets extending over a significant time period. Interest capitalized is restricted to the amount of interest actually incurred.
Consider the case of the following two companies that both constructed a building with a total construction cost of $20 million but chose to finance the construction differently.
The costs were incurred evenly over the course of a year; computationally, this is the same as assuming that the entire $20 million was paid halfway through the year.




As the auditor for both companies, you are asked by your supervisor to prepare a report that calculates the total cost for each building that would be included in each company?s financial statements. Because both companies had the option of purchasing the buildings from a contractor rather than constructing them, your report should include your estimate of the price the contractor would have charged and how you explain the discrepancy in the way cost was determined for the two buildings. Conclude your report by proposing a change in the accounting standards that could eliminate thisdiscrepancy.

 







About this question:
STATUS
Answered
QUALITY
Approved
ANSWER RATING

This question was answered on: Jul 11, 2017

PRICE: $15

Solution~000910157490.zip (18.37 KB)

Buy this answer for only: $15

Pay using PayPal (No PayPal account Required) or your credit card. All your purchases are securely protected by PayPal.
SiteLock

Need a similar solution fast, written anew from scratch? Place your own custom order

We have top-notch tutors who can help you with your essay at a reasonable cost and then you can simply use that essay as a template to build your own arguments. This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student. New solution orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

Order Now
v>