A company is constructing an asset for its own use. Construction began in 2017. The asset is being financed entirely with a spec
ific 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.
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.
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.
Trough economic situation is when the recession is hardest and comes after the phase of contraction where growth slows, employment declines (unemployment increases), and pricing pressures subside.
Trough is characterized by large number of people being unemployed due to extensive layoffs by companies in order to cut down their costs and reduce their output during the period of economic decline
Symbols—such as gestures, signs, objects, signals, and words—help people understand that world. They provide clues to understanding experiences by conveying recognizable meanings that are shared by societies.
