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Basic Question 3 of 22
The type of interest that may be capitalized under GAAP is ______.
B. the lower of actual interest and avoidable interest
C. internal interest
A. actual interest
B. the lower of actual interest and avoidable interest
C. internal interest
User Contributed Comments 4
| User | Comment |
|---|---|
| poomie83 | So if a company uses debt to fund a new project is that classified as avoidable interest? And it cant be less than interest from other activities? |
| moneyguy | I think Avoidable Interest = Mkt Interest Rate. Not sure, though. :) |
| robbiecow | The amount of interest that an organization would have avoided if it had not made the expenditures for an asset. Great illustration: http://www.wiley.com/college/kieso/trans/ch10.pdf |
| carlo_it | to be reviewed |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe presentation choices, including non-GAAP measures, that could be used to influence an analyst's opinion
describe accounting methods (choices and estimates) that could be used to manage earnings, cash flow, and balance sheet items
describe accounting warning signs and methods for detecting manipulation of information in financial reports
CFA® 2025 Level I Curriculum, Volume 3, Module 10.