On June 1, 2020, the ABC Company began construction of a new manufacturing plant. The plant was completed on October 31,
Posted: Thu May 19, 2022 2:01 pm
On June 1, 2020, the ABC Company began construction of a new
manufacturing plant. The plant was completed on October 31, 2021.
Expenditures on the project were as follows ($ in millions):
On July 1, 2020, ABC obtained a $86 million construction loan with
a 10% interest rate. The loan was outstanding through the end of
October, 2021. The company's only other interest-bearing debt was a
long-term note for $100 million with an interest rate of 11%. This
note was outstanding during all of 2020 and 2021. The company's
fiscal year-end is December 31.
What is the amount of interest that ABC should capitalize in 2020,
using the specific interest method?
manufacturing plant. The plant was completed on October 31, 2021.
Expenditures on the project were as follows ($ in millions):
On July 1, 2020, ABC obtained a $86 million construction loan with
a 10% interest rate. The loan was outstanding through the end of
October, 2021. The company's only other interest-bearing debt was a
long-term note for $100 million with an interest rate of 11%. This
note was outstanding during all of 2020 and 2021. The company's
fiscal year-end is December 31.
What is the amount of interest that ABC should capitalize in 2020,
using the specific interest method?