The Following Information Pertains to Equipment Constructed by a Firm

The following information pertains to equipment constructed by a firm for its own use. The construction is finished. $$\begin{array} { | l | l | } \hline \text { Materials used in construction } & \$ 40,000 \\\hline \text { Labour cost during construction } & 20,000 \\\hline \text { F ringe benefits on above labour } & 5,000 \\\hline \text { Incremental overhead due to Construction } & 8,000 \\\hline \text { Interest expense on debt during Construction (assume this meets the requirements for interest capitalization) } & 4,000 \\\hline\end{array}$$ The market value of the equipment immediately after construction was completed was $65,000. What is the loss on construction incurred by the firm?

A) $0
B) $12,000
C) $8,000
D) $5,000
E) $4,000

Correct Answer:

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