Company Info

DIRECTIONS

On January $1,2021,$ Company A began the construction of a building to be used as its office headquarters. The building was completed on September $30,2022.$ Expenditures on the project were as follows:

On January $1,2021,$ the company obtained a $$4$ million construction loan with a $8\%$ interest rate. The loan was outstanding all of $2021$ and $2022.$ The company's other interest$-$bearing debt included two long$-$term notes of $$5,000,000$ and $7,000,000$ with interest rates of $4\%$ and $6\%,$ respectively. Both notes were outstanding during all of $2021$ and $2022.$ Interest is paid annually on all debt. The company's fiscal year$-$end is December $31.$

Complete the following.

Calculate the amount of interest that the company should capitalize in $2021$ and $2022$ using the specific interest method.

What is the total cost of the building?