Final answer:
The correct fraction to use for multiplying an expenditure made on April 1 to find weighted-average accumulated expenditures is 8/12, as the construction lasted from April 1 to December 1, covering 8 months out of the year.The correct option is B.
Step-by-step explanation:
The question relates to the concept of calculating weighted-average accumulated expenditures for a qualifying asset under construction, which is a topic covered in financial accounting or business studies. When an asset is constructed over a period of time, interest costs may be capitalized as part of the cost of that asset. To determine the average accumulated expenditures over the construction period, each expenditure is multiplied by a fraction representing the portion of the construction period remaining after the expenditure is made. In this case, construction starts on April 1 and finishes on December 1, which is a total of 8 months.
An expenditure made on April 1 would be outstanding for the entire 8-month construction period. Therefore, the fraction used would be 8 months out of 12 months in a year, or 8/12. This means that the correct answer to the question, 'The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures,' is option (b) 8/12.