Ask Question
BusinessBusiness
28 November, 14:56

A company is constructing an asset for its own use. Construction began in 2017. The asset is being financed entirely with a specific new borrowing. Construction expenditures were made in 2017 and 2018 at the end of each quarter. The total amount of interest cost capitalized in 2018 should be determined by applying the interest rate on the specific new borrowing to the:a. total accumulated expenditures for the asset in 2017 and 2018. b. weighted-average accumulated expenditures for the asset in 2017 and 2018. c. weighted-average expenditures for the asset in 2018. d. total expenditures for the asset in 2018.

+1
Answers (2)
  1. 28 November, 17:23
    0
    The total amount of interest cost capitalized in 2018 should be determined by applying the interest rate on the specific new borrowing to the weighted-average accumulated expenditures for the asset in 2017 and 2018

    Explanation:

    Interest cost is the increasing value of interest a borrower pays on a debt obligation over the duration of the borrowing. In other words, you pay interest when you borrow and you earn interest when you lend or deposit funds in bank accounts.

    Given that construction began in 2017 and expenditures were made in 2017 and 2018; to get the total amount of interest cost capitalized in 2018; we must first get the total accumulated expenditures for assets in 2017 and 2018; after which that weighted average is calculated.

    This is so because the weighted-average accumulated expenditures one of the amounts used in determining the amount of interest to be capitalized when a company self-constructs certain long-term assets.
  2. 28 November, 18:44
    0
    option B

    Explanation:

    On the off chance that an advantage is being built and is being financed totally with a particular new obtaining. Development costs are spread more than two years The aggregate sum of intrigue cost promoted in the subsequent year is dictated by applying the loan cost on the particular new obtaining to the weighted-normal amassed consumption's for the advantage in both of the years.

    The correct answer is option B

    weighted-average accumulated expenditures for the asset in 2017 and 2018.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A company is constructing an asset for its own use. Construction began in 2017. The asset is being financed entirely with a specific new ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
A merger between mcdonalds and burger king would be considered what type of merger?
Answers (1)
Economists define potential income as the level of income that: Group of answer choices an economy is capable of producing without generating significant unemployment. the economy always produces.
Answers (1)
Lava Excavators, Inc., needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company. Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late.
Answers (1)
Demand for earbuds is represented by: P = 402 - 2Q The costs are $8 per set of earbuds. In order to stock earbuds, other items which average $2 in profit must be taken off the shelf. How many earbuds should you order?
Answers (1)
Joseph haydn was content to spend most of his life as what
Answers (2)
New Questions in Business
For its Premium Banking Customers, Upscale Bank has an average acquisition cost of $300, Annual Revenue of $600 with an Annual Retention cost of $ 100 and a churn rate of 10%. Calculate average non-discounted CLV.
Answers (1)
Which of the following statements is true? A. In a job-costing system, average production cost is calculated for all units produced. B. In a job-costing system, overheads are allocated to all units equally. C.
Answers (1)
Gemma's music store is doing well, but her goal is to improve customer satisfaction. In order to do so, she should A. improve the quality of her products. B. track her sales carefully. C. lower her prices. D. understand her customers' values.
Answers (2)
A ___It's a written set of instructions that tells a bank how to use money to pay someone
Answers (1)
Tyler returned $500 worth of merchandise within the discount period. The entry to record the return is which of the following? A. Debit Purchases for $500; credit Accounts Payable $500 B.
Answers (1)
Home » Business » A company is constructing an asset for its own use. Construction began in 2017. The asset is being financed entirely with a specific new borrowing. Construction expenditures were made in 2017 and 2018 at the end of each quarter.
Sign Up Forgot Password?