Question
Doggy Co. began construction of a new cutter for the U.S. Coast Guard on January 1, 2011 and completed construction of the ship on October
Doggy Co. began construction of a new cutter for the U.S. Coast Guard on January 1, 2011 and completed construction of the ship on October 31, 2012. To finance construction, Doggy took out an $8,000,000, 2-year 6% construction loan on February 1, 2011. Interest on the loan was to be paid annually on the anniversary date of the loan. Doggy has no other outstanding interest-bearing debt. Doggy made the following expenditures in conjunction with this construction project: a) What would be the amount of Doggy's cumulative weighted average expenditure during 2011 related to cutter project? b) how much interest should Doggy capitalize in 2011 related to the cutter project?
Doggy Co. began construction of a new cutter for the U.S. Coast Guard on January 1, 2011 and completed construction of the ship on October 31, 2012. To finance construction, Doggy took out an $8,000,000, 2-year 6% construction loan on February 1, 2011. Interest on the loan was to be paid annually on the anniversary date of the loan. Doggy has no other outstanding interest-bearing debt. Doggy made the following expenditures in conjunction with this construction project: a) What would be the amount of Doggy's cumulative weighted average expenditure during 2011 related to cutter project? b) how much interest should Doggy capitalize in 2011 related to the cutter projectStep by Step Solution
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