The term used to describe the amount of a company's annual interest cost that should be capitalized is known as:
A) tangible interest
B) actual interest
C) average accumulated expenditures
D) avoidable interest

Question

Quizplus · Accepted Answer

The term used to describe the amount of a company's annual interest cost that should be capitalized is known as avoidable interest. This term refers to the portion of interest expenses that could have been avoided if the company had not undertaken the qualifying asset project. This amount is capitalized and added to the cost of the asset because it is considered to be directly related to the acquisition, construction, or production of that asset. The other choices (A, B, and C) do not accurately describe this concept.

The Term Used to Describe the Amount of a Company's