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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Belardo Corporation constructed and manufactured certain assets and incurred the following avoidable interest costs in connection with those activities:

Chapter 10, Problem 7MC, Belardo Corporation constructed and manufactured certain assets and incurred the following avoidable

All of these assets required an extended period of time for completion. Assuming that the effect of interest capitalization is material, what is the total amount of interest costs to be capitalized?

  1. a. $0
  2. b. $20,000
  3. c. $29,000
  4. d. $36,000

To determine

Calculate the amount of total interest to be capitalized.

Explanation

Capitalized interest:

Interest Cost incurred to finance the construction of a long-term construction projects are known as capitalized interest.

Justification for the incorrect option a, b and d:

$0, $20,000 and $36,000 are not the amount of interest to be capitalized.

Justification for the correct option c:

Calculate the amount of interest to be capitalized:

Amountofinteresttobecapitalized}=(WarehouseconstructedforCorpor

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