ACC 304 All Assignments ACC 304 All Assignments | Page 133

3. When land with an old building is purchased as a future building
site, the cost of removing the old building is part of the cost of the new
building.
4. Insurance on equipment purchased, while the equipment is in
transit, is part of the cost of the equipment.
5. Special assessme nts for local improvements such as street lights
and sewers should be accounted for as land improvements.
6. Variable overhead costs incurred to self-construct an asset
should be included in the cost of the asset.
7. Companies should assign no portion of fixed overhead to self-
constructed assets.
8. When capitalizing interest during construction of an asset, an
imputed interest cost on stock financing must be included.
9. Assets under construction for a company’s own use do not
qualify for interest cost capitalization.