Diamond Offshore Drilling, Inc. (DOD), is an international company that provides contract drilling services to the energy industry. In its 2015 Form 10-K, it reports the following information related to its interest expense and interest capitalization.
A reconciliation of our total interest cost to "Interest expense" as reported in our consolidated statements of operations is as follows

Required:
1. Prepare the journal entry that DOD made in 2014 to capitalize interest.
2. Explain how this entry affected its pretax income, cash from operations, and cash from investing activities in 2014.
3. Explain how the capitalization of interest affects pretax income, cash from operations, and cash from investing activities in the years after 2014.
4. What economic factors occurring in 2014 and 2015 would explain the dramatic fall in the amount of interest capitalized?

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For the Year Ended December 31 2015 2014 2013 (In thousands) Total interest cost including amortization s 110,242 122,656 122656 of debt issuance costs Capitalized interest Total interest expense as reported (60,603) S93,934 62053 62053