The Willis Company has unproved property costs of ($40,000) at January 1, 2006. During the year 2006,

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The Willis Company has unproved property costs of $$40,000$ at January 1, 2006. During the year 2006, Willis incurred $$400,000$ drilling costs on Lease A. An 8%, $$500,000$ note is outstanding during the entire year and was obtained to finance the drilling program.

Compute the interest capitalization amount and record the interest.

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