Question

On March 1, Gismo Co. began construction of a small building. Payments of $2,400,000 were made monthly for three months beginning March 1. The building was completed and ready for occupancy on June 1. In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are

Answer 1

Answer:

$1,200,000

Explanation:

Gismo Co weighted-average accumulated expenditures

$2,400,000 (3/12 + 2/12 + 1/12)

=$2,400,000 ×0.5

= $1,200,000

Therefore In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are $1,200,000