Question
Construction began on January 1, 2019 and the building was completed on December 31, 2020. January 1, 2019$1,400,000 March31, 2019$900,000 June 30, 2019$800,000 July 31,
Construction began on January 1, 2019 and the building was completed on December 31, 2020.
January 1, 2019$1,400,000
March31, 2019$900,000
June 30, 2019$800,000
July 31, 2019$600,000
September 1, 2019$750,000
January1, 2020$3,000,000
April 30, 2020$900,000
September 30, 2020$800,000
Building complete December 31, 2020
On January 1, 2019, ALMO obtained a $8,000,000 construction loan with a 5% interest rate.The loan was outstanding for 2019 and 2020.The company's other interest-bearing debt included two long-term notes of $4,000,000 and $4,000,000 with interest rates of 8% and 7%, respectively.Both notes were outstanding during all of 2019 and 2020.Interest is paid annually on all debt. The company's fiscal year end is December 31.
a) Using the information above, if the average approach is used the amount of interest capitalized for 2019 should be?
NOTE: Calculate your interest rate to this levelX.XX%
b) If the average approach is used the total cost capitalized for the building at completion would be?
c) If the specific interest approach is used the total cost capitalized for the building at completion would be?
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