During 2007, Gannon Co

Multiple Choice

During 2007, Gannon Co.incurred average accumulated expenditures of $400,000 during construction of assets that qualified for capitalization of interest.The only debt outstanding during 2007 was a $500,000, 10%, 5-year note payable dated January 1, 2005.What is the amount of interest that should be capitalized by Gannon during 2007?

A) $0.
B) $10,000.
C) $40,000.
D) $50,000.