On December 31, 2024, Main Inc. borrowed $3,000,000 at 12% payable annually to finance the construction of

Question:

On December 31, 2024, Main Inc. borrowed $3,000,000 at 12% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $360,000; June 1, $600,000; July 1, $1,500,000; December 1, $1,500,000. The building was completed in February 2026. Additional information is provided as follows.image


Instructions


a. Determine the amount of interest to be capitalized in 2025 in relation to the construction of the building.


b. Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2025.

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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 9781119790976

18th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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