Question
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
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, $610,000; March 31, $710,000; June 30, $510,000; October 30, $930,000. The company arranged a 10% loan on January 1 for $920,000. Assume the $920,000 loan is not specifically tied to the construction of the building. The companys other borrowings, outstanding for the whole year, consisted of a $2 million loan and a $4 million note with interest rates of 12% and 9%, 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 answer to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).)
HINTS FOR THE SECOND/BOTTOM PART OF THE TABLE:
On the first line, enter the AAE in the "Amount" column.
On the second line, select "All loans" for the first column, enter the AAE in the Amount column, enter the weighted-average interest rate in the Interest Rate column (you will need to compute the weighted-average interest rate), and enter the capitalized interest amount in the Capitalized Interest column.
On the third line, enter "0" in the Capitalized Interest column.
On the fourth line, enter the capitalized interest from the second line as the total in the Capitalized Interest column.
rev: 01_16_2020_QC_CS-195439
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