Question

On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2019. The company borrowed $1,850,000 at 10% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2018: $4,000,000, 14% bonds $1,000,000, 10% long-term note Construction expenditures incurred during 2018 were as follows: January 1 $ 800,000 March 31 1,400,000 June 30 1,040,000 September 30 800,000 December 31 600,000 Required: Calculate the amount of interest capitalized for 2018 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)

Answer 1

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Dale Expenditure weight Average January 1 $800,000 & 12 $ 800,000 March 31 $1,400,000 & 2 $ 1050,000 June 30 $1040,000 stos $529000 September 30 $ 800,00 + sto $ 20000 December 31 $ 600,00 X sto Accumulated Expenditude $4649,000 $ 2570,000 calculation of weighted average rate of all other Debt : $ 4 000000 x 14%. S60,000 $ 1 000 000 107 looow $ 660,000 5,000,00 660,000 x100 S000,000 = 13-2% Amount of Interest Capitalization Average Average accumulated Expenditure $ 25, 70000 Interest vale Capitalized Interest Please acumulador de $ 2570 185.000 95040 construction loan (Specific Debt) 1850,000 * loy other loan (257000 - 1850,00) 720,000 X 13.2% Amount of Inzexest capitized for 2018 $280040

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