Practice prompt · Q:tangible-asset-acquisition-capitalization-and-resources/construction-scope-001

Control a self-construction ledger before interest

Identify the construction cost and readiness controls that precede weighted interest calculation.

Updated Sep 10, 2026 Review due Nov 8, 2026

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Riverbend Automation builds a production cell for its own use. The controlled ledger reports $420,000 of materials used, $150,000 of direct labor, $80,000 of contractor work, and $50,000 of supported construction overhead. Separate rows contain $25,000 of general administration, $12,000 of operator training, $18,000 of abnormal rework, and $10,000 of idle time. The cell was ready for intended use on August 31. Which conclusion reconciles the ledger?

Choose the best answer. A $700,000 asset cost before interest and $65,000 of period costs; retain August 31 as the readiness date and test interest separately. B $765,000 asset cost before interest because every project-code amount was approved. C $700,000 asset cost before interest and $65,000 deferred until the first full operating month. D $840,000 asset cost after adding a 20% internal profit to the $700,000 construction amount.

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Answer: A

Choice A. $420,000 + $150,000 + $80,000 + $50,000 = $700,000 before interest. $25,000 + $12,000 + $18,000 + $10,000 = $65,000 of period costs.