Question

The specific interest and the weighted average interest methods for determining capitalized interest will yield same results except when

A. Construction debt interest rates differ from the rates of other interest bearing debt
B. There is no construction related debt
C. There is no interest bearing debt other then construction related
D. Construction debt interest rates are the same as the rates of other interest bearing debt

Answer 1

The specific interest and the weighted average interest methods for determining capitalized interest will yield same results except when there is no construction related debt.

Step-by-step explanation:

The question is about the specific interest and the weighted average interest methods for determining capitalized interest. These methods are used to calculate the interest expenses that can be capitalized as part of the cost of a construction project.

The answer is B. There is no construction related debt. When there is no construction related debt, the two methods will yield the same results, as there is no need to differentiate between construction and other interest-bearing debt.