Chapter 10

Question 1

PP&E: COSTS SUBSEQUENT TO ACQUISITION - MAJOR EXPENDITURES

HINT: “Our AIR is so polluted that it needs REPAIRS!”

Answer 1

• Additions
• Improvements & Replacement
• Rearrangements & Reorganizations
• Repairs

Question 2

PP&E: ACQUISITION & DISPOSITION - COMPUTATION OF AVOIDABLE INTEREST

HINT: “WAC a rat many times in order to avoid intrusion into your food.”

Answer 2

Weighted-Averaged ACcumulated Expenditure X Interest Rate = Avoidable Interest

• WAC = Weighted-Average ACcumulated Expenditure
• rat = Interest Rate
• “many times” = multiplication
• “avoid intrusion” = Avoidable Interest