Pretend that you are at a cocktail party talking to the CEO of a small company who has a minimal understanding of accounting. She learns that you are a CPA, buys you a beverage (adult-type if that is your preference), and engages you in conversation. She explains that her company is acting as the general contractor for the construction of its own manufacturing plant. She's been advised that the company must "capitalize interest" in connection with the project. She has no idea what that means. She's concerned that this will cost her company money. Explain the concept, the reasoning behind it, and potential advantages to the company from this entirely appropriate accounting. Remember, she is a knowledgeable business person, but not as well versed in accounting as she would like to be. Your explanation should be careful not to assume that she understands much accounting jargon.

Confidential note: She's seeking out every CPA she can find. The one who provides the best answer will be her new accountant!! If you want the business, (and the full 10 points), you might want to subtly and professionally "supplement" the responses of your competition. However, don't be a jerk...nobody likes a jerk :)

It's ok to have a little fun here, just make sure to be respectful of your classmates! Your score will be based upon the substance of your response, but if I'm entertained a little, I don't see how that could hurt.