During 2010, Weber Co.incurred average accumulated expenditures of $500,000 during construction of assets that qualified for capitalization of interest.The only debt outstanding during 2010 was a $600,000, 8%, five-year note payable dated January 1, 2008.What is the amount of interest that should be capitalized by Weber during 2010?
A)$40,000
B)$0
C)$20,000
D)$30,000

Question

Quizplus · Accepted Answer

The amount of interest that should be capitalized by Weber during 2010 is $40,000. This is calculated by multiplying the average accumulated expenditures of $500,000 by the interest rate of 8%.