What is the amount of interest that Crocus should capitalize in 2008, using the specific interest method?
A)$1.90 million
B)$1.95 million
C)$2.96 million
D)None of these is correct.Average expenditures for 2008: ($54 million 6/6) + $22 million 3/6) = $65 million.The interest is: $65 million .06 6/12 = $1.95 million.

Question

Quizplus · Accepted Answer

The amount of interest that Crocus should capitalize in 2008 using the specific interest method is $1.95 million. This is calculated by multiplying the average expenditures for 2008 ($65 million) by the interest rate (6%) and the fraction of the year capitalized (6/12). Therefore, the correct answer is B.

What Is the Amount of Interest That Crocus Should Capitalize