Compare and contrast the three (3) approaches to account for interest cost during the five-year

Compare and contrast the three (3) approaches to account for interest cost during the five-year

In short paragraphs, You are the construction accountant for an organization, and management is unsure of the manner in which it should record interest cost during the construction of a new building that will take five (5) years to complete. Compare and contrast the three (3) approaches to account for interest cost during the five-year period, and give your opinion of the method that you believe would result in the lowest net income over the first three (3) years. Ascertain the overall impact that interest cost has on the balance sheet.

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No capitalization approach is where the interest charges incurred are considered part of the financing cost. This approach depends on management’s decision to use debt and not equity to finance the project…