a. What is the effect of capitalizing interest on reported net income summed over all the periods of the life of a gin self-constructed asset, from building through use until eventual retirement? Contrast with a policy of expensing interest as incurred.
b. Consider a company engaging in increasing dollar amounts of self-construction activity each period during periods when interest rates do not decline. What is the effect on reported income each year of capitalizing interest in contrast to expensing interest as incurred?