The Hard Luck Oil Company incurs unproved property (Lease A) costs of \($60,000\) on April 1, 2005. An 8% loan is obtained on April 1, 2005, for \($500,000\) to finance a drilling program. Hard Luck started a well on Lease A on June 1, 2005, and the well is still in progress at 12/31/05. Drilling costs to 12/31/05 are \($300,000.\) The company excludes all possible costs from the cost pool.

REQUIRED: 

Compute the interest capitalization amount and record the interest.