Under ASASB 123,interest incurred on a financial instrument,is able to be capitalised as part of a qualifying asset.When this is done:
A. interest is never expensed.
B. interest will be expensed as part of cost of goods sold when the asset is sold.
C. interest will be expensed as part of the accounts payable balance.
D. interest is recognised immediately.
E. interest will be recognised as an expense when the asset is revalued.

Question

Quizplus · Accepted Answer

When interest is capitalised as part of a qualifying asset, it is not immediately recognised as an expense. Instead, it is added to the cost of the asset and amortised over its useful life. When the asset is sold, the accumulated interest will be expensed as part of the cost of goods sold.

Under ASASB 123,interest Incurred on a Financial Instrument,is Able to Be