When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

Question

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Avoidable interest refers to the portion of the total interest cost that would not have been incurred if the expenditure for asset construction had not been made. This concept is used to determine how much interest cost can be capitalized as part of the cost of the fixed asset. It represents the interest that could have been avoided if the asset had not been constructed or if the construction had been completed earlier.

When Computing the Amount of Interest Cost to Be Capitalized