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c. that portion of total interest cost which would not have been
incurred if expenditures for asset construction had not been made.
d. that portion of average accumulated expenditures on which no
interest cost was incurred.
36. The period of time during which interest must be capitalized
ends when
a. the asset is substantially complete and ready for its intended use.
b. no further interest cost is being incurred.
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 qualify ing assets during the
period.