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Exercise 10-10 Your answer is partially correct. Try again. The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Splish,
Exercise 10-10 Your answer is partially correct. Try again. The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Splish, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,160,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Splish borrowed $4,160,000 payable in 10 annual installments of $416,000, plus interest at the rate of 10%. During 2017, Splish made deposit and progress payments totaling $1,560,000 under the contract; the weighted average amount of accumulated expenditures was $832,000 for the year. The excess borrowed funds were invested in short-term securities, from which Splish realized investment income of $252,200. What amount should Splish report as capitalized interest at December 31, 2017? Capitalized interest 83,200 Situation II During 2017, Blossom Corporation constructed and manufactured certain assets and incurred the following interest costs in connection with those activities. Interest Costs Incurred $31,490 Warehouse constructed for Blossom's own use Special-order machine for sale to unrelated customer, produced according to customer's specifications Inventories routinely manufactured, produced on a repetitive basis 8,390 8,020 All of these assets required an extended period of time for completion. Assuming the effect of interest capitalization is material, what is the total amount of interest costs to be capitalized? The total amount of interest costs to be capitalized
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