A company made the following cash expenditures on a self-constructed building begun January 1 of the current year:

The building is still under construction at year-end.What is the amount of the average accumulated expenditures for the purpose of capitalizing interest?
A)$87,500
B)$92,500
C)$100,000
D)$200,000

Question

A company made the following cash expenditures on a self-constructed building begun January 1 of the current year:

The building is still under construction at year-end.What is the amount of the average accumulated expenditures for the purpose of capitalizing interest?
A)$87,500 
B)$92,500 
C)$100,000 
D)$200,000

Quizplus · Accepted Answer

The average accumulated expenditures for the purpose of capitalizing interest is calculated by adding up all the payments made during the construction period and dividing it by 2. In this case, the total payments made during the construction period is $185,000, so the average accumulated expenditures would be $92,500 ($185,000/2). Therefore, the best choice is B.

A Company Made the Following Cash Expenditures on a Self-Constructed