I'm unsure how to solve for
the the 2022 portion, but I have already figured it out for
2021.
Homework Answers
Solution 1:
| Year 2021: Weighted-Average accumulated expenditure and interest capitalized | |||
| Date | Expenditure | Weight | Weighted Average Accumulated Expenditures |
| 01 July 2021 | $4,80,000 | 6/6 | $4,80,000 |
| 30 September 2021 | $7,20,000 | 3/6 | $3,60,000 |
| 30 November 2021 | $7,20,000 | 1/6 | $1,20,000 |
| Accumulated Expenditure | $19,20,000 | $9,60,000 | |
| Weighted average interest rate | |||
| Debt | Amount | Interest rate | Interest amount |
| 8% Note | $30,00,000 | 8% | $2,40,000 |
| 4% Bonds | $90,00,000 | 4% | $3,60,000 |
| Totals | $1,20,00,000 | $6,00,000 | |
| Weighted average rate (total interets/ total debt) | 5.00% | ||
| Amount | Interest Rate | Capitalized Interest | |||||
| Average Accumulated Expenditure | $9,60,000 | * | 5.00% | * | 6/12 | = | $24,000 |
Solution 2:
| Year 2022: Weighted-Average accumulated expenditure | |||
| Date | Amount | Capitalization period | Weighted Average Accumulated Expenditures |
| 01 January 2022 | $19,44,000 | 3/3 | $19,44,000 |
| 30 January 2022 | $6,60,000 | 2/3 | $4,40,000 |
| Accumulated Expenditure | $26,04,000 | $23,84,000 | |
| Amount | Interest Rate | Capitalized Interest | |||||
| Average Accumulated Expenditure | $23,84,000 | * | 5.00% | * | 3/12 | = | $29,800 |
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