Final answer:
The justification for capitalizing interest cost during construction of an asset is to match the costs with the revenues the asset will generate over its lifetime, in accordance with the matching principle.
Step-by-step explanation:
The question involves a financial accounting issue related to whether the interest cost on funds borrowed to finance the construction of a plant should be capitalized and amortized over the life of the constructed asset. The justification for capitalizing interest is that it aligns the expenses (interest costs) with the revenues generated by the asset over its useful life, reflecting a more accurate cost of the asset. Capitalization of interest during construction is appropriate as it is considered a part of the cost of bringing the asset to a condition and location ready for use. This accounting treatment is consistent with the matching principle in accounting, which seeks to match expenses with revenues in the period in which they are incurred.