Capitalization in Project Management

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What happens if a project is determined to be not technically feasible or not commercially viable?

The costs are amortized over a specific period of time.

The project continues in the hope of future profitability.

The costs are capitalized and added to the current assets.

Capitalization stops and costs are expensed immediately. (correct)

What must be proven for an asset to be available for sale or use?

Legal right to mine

Probable future economic benefits (correct)

Adequate resources

Financial feasibility

Under the successful efforts method, what happens to costs if the site is unproductive?

The costs are written off as expenses. (correct)

The costs are held as potential income in future periods.

The costs are expensed immediately.

The costs are capitalized and included as part of the asset value.

When are costs incurred during the initial period of feasibility testing to determine the technical and financial feasibility of a proposed product expensed?

Before any tangible asset is created Signup and view all the answers

How are unsuccessful efforts treated in terms of cost accounting?

Expensed initially and then potentially capitalized later. Signup and view all the answers

In which phase are costs expensed if incurred prior to obtaining the legal right to explore a property?

Pre-Exploration and Evaluation Phase Signup and view all the answers

Which costs are capitalized if a website is only used for advertising?

All expenditures Signup and view all the answers

What is the criteria for derecognition of long-lived assets?

When the asset no longer provides future benefits. Signup and view all the answers

When can costs for exploration and evaluation assets be capitalized?

When technical feasibility is reached Signup and view all the answers

In the pre-exploration and evaluation phase, what kind of costs are typically incurred?

Acquisition costs for rights, geological surveys, and exploration. Signup and view all the answers

How are costs treated in the post-exploration and evaluation phase after technical feasibility and commercial viability have been established?

Same principles as PP&E apply to these costs. Signup and view all the answers

Under which scenario should computer software costs be classified as an intangible asset?

When integrated into PP&E as a separate component Signup and view all the answers

What is the main objective for investors and lenders when assessing a company's cash flow potential?

To evaluate the company's ability to pay off debt obligations Signup and view all the answers

What is the significance of high-quality earnings in relation to operating cash flows (OCF) and earnings per share (EPS)?

High-quality earnings lead to OCF being equal to EPS Signup and view all the answers

What primary role do security analysts play in evaluating public companies?

Issuing recommendations to buy, hold, or sell shares Signup and view all the answers

Why do employers tie bonus plans to stock option plans on net income?

To align employee compensation with company performance Signup and view all the answers

What does the BoD aim to achieve by making decisions that maximize shareholder value?

Enhance the company's reputation in front of the bank Signup and view all the answers

How do income tax authorities use information reported by a company?

To evaluate the compatibility of reported information with CRA filings Signup and view all the answers

Capitalization in Project Management

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