Intermediate Accounting Discussion Question: "Interest Cost during Construction and Various Accounting Topics"
• 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 years to complete. Compare and contrast the three 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 years. Ascertain the overall impact that interest cost has on the balance sheet.