A company is constructing an asset for its own use. Construction began in 2007. The asset is being financed entirely with a specific new borrowing. Construction expenditures were made in 2007 and 2008 at the end of each quarter. The total amount of interest cost capitalized in 2008 should be determined by applying the interest rate on the specific new borrowing to the

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Quizplus · Accepted Answer

The interest cost capitalized should be determined by applying the interest rate to the average accumulated expenditures for the asset during the period of construction.

A Company Is Constructing an Asset for Its Own Use