Interest Capitalization

Question 1

Interest is capitalized when?

Answer 1

Debt is incurred during construction of plant assets

Question 2

Computing interest using specific method

Answer 2

Uses specific loan first then remaining debt is used by calculating an average percentage

Question 3

Computing interest using weighted average

Answer 3

Method uses all interest rate on all bearing debt, weighted by principal

Question 4

Interest is expensed when?

Answer 4

A purchase is made