Devry ACCT 550 Assignment
Questions:1. Codification Research CaseYour client is in the planning phase for a major plantexpansion, which will involve the construction of anew warehouse. The assistant controller does notbelieve that interest cost can be included in the costof the warehouse, because it is a financing expense.Others on the planning team believe that someinterest cost can be included in the cost of thewarehouse, but no one could identify the specificauthoritative guidance for this issue. Your supervisorasks you to research this issue.(a)Is it permissible to capitalize interest into the cost ofassets? Provide authoritative support for youranswer.(b)What are the objectives for capitalizing interest?(c)Discuss which assets qualify for interestcapitalization.(d)Is there a limit to the amount of interest that may becapitalized in a period?(e)If interest capitalization is allowed, what disclosuresare required?2. Usually an asset is acquired by paying cash or credit; theaccounting treatment as we know is very straight forward and weput this asset on the balance sheet at cost acquired. But whenone company trades its asset for an asset of another company,the accounting treatment is quite different. Can you describe how to record an asset that is acquired by a company from anothercompany in exchange of its own asset?
