Interest During Construction
Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2016, and was completed on October 31, 2016. Expenditures related to this building were:
January 1 | $252,000 | (includes cost of purchasing land of $150,000) |
May 1 | 310,000 | |
July 1 | 420,000 | |
October 31 | 276,000 |
In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year.
Required:
$
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1 | |||
Expenditure | |||
01-Jan | 252,000 * 10 /12 | 210000 | |
01-May | 310000 * 6/12 | 155000 | |
01-Jul | 420,000 * 4 /12 | 140000 | |
31-Oct | 276000 * 0/12 | 0 | |
Average investment | 505000 | ||
2 | Wrighted average accumulated expenditure | ||
Actual interest | Principal | Interest | |
8 % construction loan | 1000000 | 80000 | |
9% Long term loan | 500000 | 45000 | |
10% long term loan | 800000 | 80000 | |
2300000 | 205000 | ||
Interest to be capitalised | 40400 | (505000*8%) |
Interest During Construction Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2016, and was completed on October...
Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2016, and was completed on October 31, 2016. Expenditures related to this building were: January 1 $252,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 420,000 October 31 276,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the...
Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $258,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 450,000 October 31 280,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was...
Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $258,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 450,000 October 31 280,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was...
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