Question
In: Accounting
During 2020, Vaughn Manufacturing incurred weighted-average accumulated expenditures of $1730000 during construction of assets that qualified...
During 2020, Vaughn Manufacturing incurred weighted-average accumulated expenditures of $1730000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2020 was a $2000000, 12%, 5-year note payable dated January 1, 2020.
What is the amount of interest that should be capitalized by Vaughn during 2020? Question 10 options: a) $240,000 b) $207,600 c) $0 d) $32,400
Solutions
Expert Solution
The amount of interest capitalized by Vaughn during 2020 is calculated as follows:
The amount of interest capitalized by Vaughn = Weighted-average accumulated expenditures * Rate of Interest
= $1,730,000 * 12%
= $207,600
The amount of interest capitalized by Vaughn during 2020 is $207,600
So correct answer is an option (b) or $207,600
ekkarill92 answered 2 years agoRelated Solutions
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