Interest Capitalization Flashcards
1
Q
Interest is capitalized when?
A
Debt is incurred during construction of plant assets
2
Q
Computing interest using specific method
A
Uses specific loan first then remaining debt is used by calculating an average percentage
3
Q
Computing interest using weighted average
A
Method uses all interest rate on all bearing debt, weighted by principal
4
Q
Interest is expensed when?
A
A purchase is made
