Interest Cost during Construction and Various Accounting Topics

Interest Cost during Construction and Various Accounting Topics

Interest Cost during Construction and Various Accounting Topics

In short paragraphs, You are the construction accountant for an organization, and management is unsure of the manner in which it should record interest cost during the construction of a new building that will take five (5) years to complete. Compare and contrast the three (3) approaches to account for interest cost during the five-year period, and give your opinion of the method that you believe would result in the lowest net income over the first three (3) years. Ascertain the overall impact that interest cost has on the balance sheet.

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Interest cost during construction is defined as the financial charges incurred in achieving the acquisition of assets such as plants, property or equipment. Companies can only capitalize costs in cases where there are materials involved…

APA

310 words

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