Case D

Robert Sporting Goods Company constructed a building that qualified for interest capitalization. The construction began at the beginning of the 2020 and was completed at the end of the year.

The construction cost totaled $10 200 000 and the weighted average accumulated expenditure associated with the asset was $6 800 000.

Robert Sporting Goods Company had outstanding notes payable during the entire year of construction comprising $6 000 000 8% interest and $9 000 000 9% interest. None of these borrowings were specified for the construction of the qualified asset.

Required:

Complete the following schedules to calculate the following for 2020:

i) Actual interest

ii) Capitalization rate

iii) Avoidable interest

iv) Capitalized interest

v) Interest expensed

vi) Capitalized cost of the building

	Principal ($)	Interest ($)
8% Note Payable	Answer	Answer
9% Note Payable	Answer	Answer
Total	Answer	Answer