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a Pr. 10-168Capitalization of interest. Early in 2015, Dobbs Corporation engaged Kiner, Inc. to design and construct complete modernization of Dobbs's manufacturing facility. Construction was
a Pr. 10-168Capitalization of interest. Early in 2015, Dobbs Corporation engaged Kiner, Inc. to design and construct complete modernization of Dobbs's manufacturing facility. Construction was begun on June 1, 2015 and was completed on December 31, 2015. Dobbs made the following payments to Kiner, Inc. during 2015: Date Payment June 1, 2015 $3,600,000 August 31, 2015 5,400,000 December 31, 2015 4,500,000 In order to help finance the construction, Dobbs issued the following during 2015: 1. $3,000,000 of 10-year, 9% bonds payable, issued at par on May 31, 2015, with interest payable annually on May 31. 2. 1,000,000 shares of no-par ordinary shares, issued at $10 per share on October 1, 2015. In addition to the 9% bonds payable, the only debt outstanding during 2015 was a $750,000, 12% note payable dated January 1, 2011 and due January 1, 2021, with interest payable annually on January 1. Instructions Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during 2015. 3. Total amount of interest cost to be capitalized during 2015
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