Question
During 2020, a building company constructed various assets at a total cost of $14,700,000. The weighted average accumulated expenditures on assets qualifying for capitalization of
During 2020, a building company constructed various assets at a total cost of $14,700,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2020 were $10,700,000. The company had the following debt outstanding at December 31, 2020:
10%, 5-year note to finance construction of various assets, dated January 1, 2020, with interest payable annually on January 1 | $6,300,000 |
12%, ten-year bonds issued at par on December 31, 2014, with interest payable annually on December 31 | 7,000,000 |
9%, 3-year note payable, dated January 1, 2019, with interest payable annually on January 1 | 3,500,000 |
Instructions Compute the amounts of each of the folllowing (show computations): A. Avoidable interest for 2020. B. Actual interest for 2020. C. Total interest to be capitalized during 2020.
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