Exercise 10-10 interest. The following three situations involve the capitalization Situation I On January complete the project. Also on January 1, 2017, to finance the construction cost, Pearl borrowed $4,145,000 payable in 10 annual installments 2017, Pearl, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4.145,000. It was estimated that it would take years to f$414,500, plus interest at the rate of 10%. During 2017, Pearl made deposit and progress payments totaling $1,554,375 under the contract; the weighted-average amount of accumulated expenditures was $829,000 for the year. The excess borrowed funds were invested short-term securities, from which Pearl realized investment income of $270,000. What amount should Pearl report as capitalized interest at December 31, 2017? Capitalized interest Situation II During 2017, Martinez Corporation constructed and manufactured certain assets and incurred the following interest costs in connection with those activities. Interest Costs Incurred Warehouse constructed for Martinez's own use $34,730 .. le unrelated customer, produced according to customer's specifications 8,940 Inventories routinely manufactured, produced on a repetitive basis 8,550 Al f these assets required an extended period of time for completion. Assuming the effect of interest capitalization is material, what is the total amount interest costs to be capitalized? The total amount of interest costs be capitalized Situation III Sandhill, Inc. has a fiscal year ending April 30. On May 1, 2017, Sandhill borrowed $9,892,000 at 11% o finance construction of its own building. Repayments of the loan are to commence the . These expenditures were incurred evenly completed structure totaled $6,92 throughout the vear, Interest earned on the unexpended portion of the loan amounted to $642.980 for the vear. How much should be shown as capitalized interest on Sandhill's financial statements April 30, 2018? Capitalized interest on Sandhill's financial statements