ACC 304 All Assignments ACC 304 All Assignments | Page 134

10. Avoidable interest is the amount of interest cost that a company
could theoretically avoid if it had not made expenditures for the asset.
11. When a company purchases land with the intention of
developing it for a particular use, interest costs associated with those
expenditures qualify for interest capitalization.
12. Assets purchased on long-term credit contracts should be
recorded at the present value of the consideration exchanged.
13. Companies account for the exchange of nonmonetary assets on
the basis of the fair value of the asset given up or the fair value of the
asset received.
14. If a nonmonetary exchange lacks commercial substance, and
cash is received, a partial gain or loss is recognized.
15. When a company exchanges nonmonetary assets and a loss
results, the company recognizes the loss only if the exchange has
commercial substance.