B. Capitalized Interest Review ProblemOn January 1, 2018, the Gilligan Company began construction on a new manufacturing facility for its own use. The building was completed in early 2019. Throughout 2018, the company had interest-bearing debt, which included two long-term notes of $4,000,000 and $6,000,000 with annual interest rates of 6% and 8%, respectively. Construction expenditures incurred during 2018 were as follows:

Date Amount

January 1 $500,000

March 1 600,000

July 31 480,000

September 30 600,000

December 1 400,000

Required:

1. Calculate the amount of interest that Gilligan will capitalize related to the construction (notice that there is no construction-specific debt in this problem).

2. Assuming no other expenditures than those listed above, at what value should Gilligan record the building when construction is complete?