Question

A company constructs a bulding for its own use Construction began on January and ended on December 30 The expendtures for construction were as follows January 8620000 March 3t 5720000 5 520 000 October 30 5960000 To help finance construction the company arranged a construction toon on January 1for 5940.000 The company's other borrowings. outstanding for the whole year compted of a 33 milion loan and a 55 meson note with interest rates of as and ot respectively. Assuming the company the finest method calculate the amount of interest e d for the year Do not round Intermediate calculations Pound your percentageswers to 2 dece places 01234 should be entered as 12345 70 000 12/12 15 570 000 250 000 200 Ag could editors Construction on 600 000

Answer 1

666 Answe: The interest to be Capitalized is $109,000 . Average accumulated expenditures! - Date | Expenditures weight Average accumulated expen January | $ 620,000 x 12/12 = 1 620,000 March 31 $ 720,000 x 912=0.75 540000 June 30 | $ 520,000 X 6/12 = 0.5 260,000 October 30 $ 960,000 X 2/12 = 0.166666 160,000 Here The specific borrowin q C$940,000) is less than the amount spent on asset during the period, celighted average rate of debt: Loan amount | Rate Interest $3 million 87. 240,000 $ 5 million 300,000 $ 8 million 540,000 weighted average debt rate is 6.75%. (( $540,000/$8 million)x100) Loan Rate Interest $940,000 $65,800 $ 640,000 6:75). C$ 1580.000- 940,000 $ 109,000 6%. 77. $43.200