Question
During 2020, North Company constructed a building. Construction began on January 1, 2020. The building was completed December 31, 2020. North made payments to the
During 2020, North Company constructed a building. Construction began on January 1, 2020. The building was completed December 31, 2020. North made payments to the builder of $3,000,000 on January 1, 2020, $6,000,000 on September 1, 2020, and $1,000,000 on December 31, 2020. On January 1, 2010, North borrowed $10,000,000 at an interest rate of 9% to finance the building. North invested unspent borrowed funds, obtaining a return of 4% (annualized) on those funds while they were invested. How much interest should North Company capitalize on the construction of the building in 2020? |
$450,000 | ||
$250,000 | ||
$900,000 | ||
$223,333 |
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