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How to capitalize interest for self-constructed assets?
I'm having trouble determining the weights to calculate the AAE (Average Accumulated Expense) through the weighted-average method.
Suppose Water Company made the following expenses for a project that lasted from July 1, 2016 to March 1, 2017 :
July 1, 2016 $100,000 x 6/12
August 31, 2016 $150,000 x 4/12
November 30, 2016 $175,000 x 1/12
December 31, 2016 $250,000 x ?
January 31, 2017 $300,000 x 1/2
March 1, 2017 $400,000 x 0
What is the weight for December 31, 2016's expense. The numerator for the rest of the weights were from the date of the cost was incurred to the end of the year. The denominator is the number of months in which the construction lasted during the fiscal year. Using this rule, how would you account for December 31, 2016's expense?
I'm having trouble determining the weights to calculate the AAE (Average Accumulated Expense) through the weighted-average method.
Suppose Water Company made the following expenses for a project that lasted from July 1, 2016 to March 1, 2017 :
July 1, 2016 $100,000 x 6/12
August 31, 2016 $150,000 x 4/12
November 30, 2016 $175,000 x 1/12
December 31, 2016 $250,000 x ?
January 31, 2017 $300,000 x 1/2
March 1, 2017 $400,000 x 0
What is the weight for December 31, 2016's expense. The numerator for the rest of the weights were from the date of the cost was incurred to the end of the year. The denominator is the number of months in which the construction lasted during the fiscal year. Using this rule, how would you account for December 31, 2016's expense?