Computing and Recording Interest Capitalization The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January of next year. The construction project is for a building intended for the company's own use. The capital expenditure on January 1 of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year. Capital Expenditures for Current Year Date Mar 31 June 30 Nov 30 Actual Expenditures $54.000 1.620.000 3240000 1.620.000 Outstanding Debt in Current Year Debt Note payable Debt Amount Interest Rate $1.800.000 Note payable 1.440.000 Bond payable 3.600.000 Note payable 900.000 10% 06 Compute Interest to Capitalize and Expense Journal Entry in Year 1 Journal Entries in Year 2 c. Assume that the project is completed on January 1 of the next year. (1) Prepare the entry to transfer costs from construction in process to property and equipment. (2) Prepare the annual entry for depreciation for that next year, assuming that the building has a useful life of 30 years with no salvage value, and that the company uses the straight-line depreciation method. Account Name Dr. D Cr. 2. To record cost transfer Account Name Dr. cr. D D To record annual depreciation