ACC 304 All Assignments ACC 304 All Assignments | Page 145

c. the asset is abandoned, sold, or fully depreciated.
d. the activities that are necessary to get the asset ready for its
intended use have begun.
37. Which of the following statements is true regarding
capitalization of interest?
a. Interest cost capitalized in connection with the purchase of land to
be used as a building site should be debited to the land account and not
to the building account.
b. The amount of interest cost capitalized during the period should not
exceed the actual interest cost incurred.
c. When excess borrowed funds not immediately needed for
construction are temporarily invested, any interest earned should be
offset against interest cost incurred when determining the amount of
interest cost to be capitalized.
d. The minimum amount of interest to be capitalized is determined by
multiplying a weighted average interest rate by the amount of average
accumulated expenditures on qualifying assets during the period.