Brief Exercise 10-15 (Static) Interest capitalization [LO10-7] A company constructs a building for its own use. Construc

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Brief Exercise 10 15 Static Interest Capitalization Lo10 7 A Company Constructs A Building For Its Own Use Construc 1 (55.71 KiB) Viewed 8 times

Brief Exercise 10-15 (Static) Interest capitalization [LO10-7] A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $500,000, March 31, $600,000, June 30, $400,000: October 30, $600,000. The company arranged a 7% loan on January 1 for $700,000. Assume the $700,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively Assuming the company uses the weighted average method, calculate the amount of interest capitalized for the year. (Do not round Intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).) Date January 1, 2021 March 31, 2021 June 30, 2021 October 30, 2021 Accumulated expenditure Average accumulated expenditures All loans Answer is complete but not entirely correct. Expenditure Weight $ 500.000 X 600,000x 400,000x 600.000x $ 2.100,000 Amount $1,250,000 • 700.000 12/12 9/12 6/12 2/12 Interest Rate 7.00 % ** % M = S 500,000 450,000 200,000 100,000 $ 1.250.000 $ Average Capitalized Interest S 49,000 0 49,000