Solution 1:
Weighted-Average accumulated expenditure and interest capitalized | |||
Date | Amount | Capitalization period | Weighted Average Accumulated Expenditures |
01-Mar | $4,53,600 | 10/12 | $3,78,000 |
01-Jun | $7,56,000 | 7/12 | $4,41,000 |
01-Jul | $18,90,000 | 6/12 | $9,45,000 |
01-Dec | $18,90,000 | 1/12 | $1,57,500 |
Total | $49,89,600 | $19,21,500 | |
*Interest rate | 13% | ||
Interest capitalized in 2020 | $2,49,795 |
Solution 2:
Computation of Interest expense | |||
Debt | Amount | Interest rate | Interest amount |
Construction Loan | $37,80,000 | 13% | $4,91,400 |
14% Bond | $50,40,000 | 14% | $7,05,600 |
11% Note | $20,16,000 | 11% | $2,21,760 |
Total interest incurred | $14,18,760 | ||
Less: Interest Capitalized | $2,49,795 | ||
Interest Expense | $11,68,965 |
Date | Accounts Title | Debit | Credit |
31-Dec | Building | $2,49,795 | |
Interest expense | $11,68,965 | ||
Cash | $14,18,760 |
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