During 2016, Dosekis Co. incurred average accumulated expenditures of $400,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2016 was a $500,000, 10%, 5-year note payable dated January 1, 2013. What is the amount of interest that should be capitalized by Dosekis during 2016?
A. $10,000
B. $40,000
C. $50,000
D. $80,000
Answer:B
During 2016, Dosekis Co. incurred average accumulated expenditures of $400,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2016 was a $500,000, 10%, 5-year note payable dated January 1, 2013. What is the amount of interest that should be capitalized by Dosekis during 2016?
A. $10,000 B. $40,000 C. $50,000 D. $80,000