ACCT 3110 Fall 2017 / Chapter 10 Homework Exercise 10-10 The following three situations involve the capitalization of interest. Situation I signed a fixed-price contract to have Builder Associates anuary 1, 2017, to finance the construction cost, Oksana Baiul borrowed On January 1, 2017, Oksana Baiul, Inc. construct a major plant facility at a cost of complete the project. Also on $4,000,000 payable in 10 annual installments of $400,000, plus interest at the rate o 2017, Oksana Baiul made deposit and progress payment weighted-average amount of accumulated expenditures was $800,000 for the year borrowed funds were invested in short-term income of $250,000 $4,000,000. It was estimated that it would take 3 years to f 10%. During s totaling $1,500,000 under the contract; the The excess securities, from which Oksana Baiul realized investment What amount should Oksana Baiul report as capitalized interest at December 31, 2017? Capitalized interest Situation II Durin201 ri ito Corporation constructed and manufactured certain assets and incurred the following interest costs in connection with those activities Interest Costs Incurred Warehouse constructed for Ito's own use Special-order machine for sale to unrelated customer, produced according to customers specifications Inventories routinely manufactured, produced on a repetitive basis $30,000 9,000 8,000 All of these assets required an extended period of time for completion Assumin be capitalized? g the effect of interest capitalization is material, what is the total amount of interest costs to The total amount of interest costs to be capitalized Situation III Peggy Fleming, Inc. has a fiscal year ending April 30. On May 1, 2017, Peggy Fleming borrowed $10,000,000 at 11% to finance construction of its own building. Repayments of the l commence the month following completion of the building expenditures for the partially completed structure totaled $ incurred evenly throughout the year. I to $650,000 for the year. oan are to . During the year ended April 30, 2018, 7,000,000. These expenditures were nterest earned on the unexpended portion of the loan amounted should be shown as capitalized interest on Peggy Fleming's financial statements at April 30, How much 2018? Capitalized interest on Peggy Fleming's financial statements