1. Capitalization of interest

In February 2024, Quorum Corp. began the construction of a 10-storey building. The construction is expected to be completed by January 2025.

During 2024, the following payments were made: Apr. 1: $1,000,000

Jun. 1: $1,500,000

Aug. 1: $900,000

Oct. 1: $950,000

No asset specific debt was incurred.

During 2024, Quorum's general debt consisted of the following:

$2 million, 5%, 2-year note,

$1.2 million, 4.5%, 2-year note,

$0.75 million, 3%, 5-year note.

Instructions

1. 1. Calculate the weighted-average accumulated expenditures for the year ended December 31, 2024.
   2. Calculate the weighted-average capitalization rate on Quorum's general-purpose debt for the year ended December 31, 2024.
   3. Calculate the avoidable borrowing costs.
   4. Calculate the amount of Quorum's borrowing costs that should be capitalized.