D is corrent. The amount of interest cost which should be capitalized during building construction is the lower of avoidable interest or actual interest. Avoidable interest equals the interest computed on the weighted-average amount of accumulated expenditures on the building ($40,000). Since actual interest is $60,000 ($50,000 + $10,000), the amount capitalized should be $40,000.
A is incorrect. The amount of interest cost which should be capitalized during building construction is the lower of avoidable interest or actual interest. Avoidable interest equals the interest computed on the weighted-average amount of accumulated expenditures on the building ($40,000). Since actual interest is $60,000 ($50,000 + $10,000), the amount capitalized should be $40,000.
B is incorrect. The amount of interest cost which should be capitalized during building construction is the lower of avoidable interest or actual interest. Avoidable interest equals the interest computed on the weighted-average amount of accumulated expenditures on the building ($40,000). Since actual interest is $60,000 ($50,000 + $10,000), the amount capitalized should be $40,000.
B is incorrect. The amount of interest cost which should be capitalized during building construction is the lower of avoidable interest or actual interest. Avoidable interest equals the interest computed on the weighted-average amount of accumulated expenditures on the building ($40,000). Since actual interest is $60,000 ($50,000 + $10,000), the amount capitalized should be $40,000.
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