PPE

Question 1

Capitalized Interest

Answer 1

Capitalized Interest is based on expenditures rather than amounts borrowed

Question 2

Capitalized Interest

Answer 2

Interest incurred during the construction period should be capitalized based on the weighted average of accumulated expenditures INterest costs incurred before or after the construction period should e expensed

Question 3

Capitalized Interest

Answer 3

Capitalized Interest the smaller of the total interest incurred or the avoidable interest

Question 4

Avoidable Interest

Answer 4

Avoidable Interest equals the interest on the

Question 5

sum of the years digits formula

Answer 5

(# of yrs remaining x (cost-salvage value))/ sum of years

Question 6

Depletion base

Answer 6

cost to purchase property

plus: development cost to prepare the land for extraction
plus: any estimated restoration costs
less: residual value of land after the resources are extracted

Question 7

Double Declining formula

Answer 7

2 x 1/N x (cost- accumulated depreciation)

where N is estimated useful life

Question 8

Depletion rate

Answer 8

Depletion base/ Estimate recoverable units

Question 9

Total depletion

Answer 9

Total depletion = unit depletion x number of units extracted