Question
Hello Tutors!! I'm having difficulty understanding how the work was done to achieve the answer. Below is the question and the answer is provided for
Hello Tutors!! I'm having difficulty understanding how the work was done to achieve the answer.Below is the question and the answer is provided for you but I would need a detailed and step by step explanation on how the work was done.
74. On May 1, 2012, Goodman Company began construction of a building. Expenditures of $240,000 were incurred monthly for 5 months beginning on May 1. The building was completed and ready for occupancy on September 1, 2012. For the purpose of determining the amount of interest cost to be capitalized, the average accumulated expenditures on the building during 2012 were a. $200,000. b. $240,000. c. $960,000. d. $1,200,000.
74. a ($240,000 4/12) + ($240,000 3/12) + ($240,000 2/12) + ($240,000 1/12) = $200,000. (WHY DID WE USE 4/12, 3/12, 2/12, 1/12??????????Pleaseprovide a detailed explanation!!
76.On March 1, Felt Co. began construction of a small building. Payments of $160,000 were made monthly for three months beginning March 1. The building was completed and ready for occupancy on June 1. In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are a. $40,000. b. $80,000. c. $160,000. d. $320,000.
160,000 (3/12 + 2/12 + 1/12) = $80,000.
(WHY DID WE USE 3/12, 2/12, 1/12??????????Pleaseprovide a detailed explanation!!
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