Multiple Choice Question 42 Which of the following is the recommended approach t

Question

Multiple Choice Question 42

Which of the following is the recommended approach to handling interest incurred in financing the construction of property, plant and equipment?

(A)Charge construction with all costs of funds employed, whether identifiable or not.

(B)Capitalize interest costs equal to the prime interest rate times the estimated cost of the asset being constructed.

(C) Capitalize only the actual interest costs incurred during construction.

(D)Capitalize no interest during construction.

Explanation / Answer

THE ANSWER IS option "c'

Capitalize only the actual interest costs incurred during construction.

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