During calendar 2017, Somalia Corp.incurred weighted-average accumulated expenditures of $800,000 during construction of assets that qualified for capitalization of interest.The only debt outstanding during 2017 was a $900,000, 8%, five-year note payable dated January 1, 2015.The amount of interest that should be capitalized during calendar 2017 is

Question

Quizplus · Accepted Answer

To determine the amount of interest to be capitalized, we need to calculate the weighted-average accumulated expenditures during the construction period and multiply it by the interest rate of the debt.

Weighted-average accumulated expenditures = $800,000
Interest rate = 8%
Interest to be capitalized = $800,000 x 8% = $64,000

Therefore, the correct answer is C) $64,000.

During Calendar 2017, Somalia Corp