单选题 A finn presented the following income statement, which complies with the 1 standards under
which it must report:
Sales 20535
Cost of goods sold 14525
Operating expenses 2530
Operating income 3480
Income taxes 1220
Income from continuing operations 2260
Extraordinary items, net of tax (525)
Net income 1735
In the next year the firm borrows $10 million to finance construction of a capital asset. Based on the differences between U.S. GAAP and International Financial Reporting Standards, this firm :

A、 must capitalize the construction interest.
B、 must not capitalize the construction interest.
C、 may choose to capitalize the construction interest.

【正确答案】 A

【答案解析】Construction interest must be capitalized under U.S. GAAP, while under IFRS the firm canchoose to capitalize construction interest. Thus, A and C are the two possible correet answers.To choose between them you need to determine whether this firm prepares its financial statements under U. S. GAAP or IFRS. The income statement shows an extraordinary item, which is ermitted under U. S. GAAP but not under IFRS.
From this we can conclude that the firm reports under U. S. GAAP, and therefore must capitalize construction interest.