Question
Flint Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,340,000 on March 2, $1,560,000 on
Flint Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,340,000 on March 2, $1,560,000 on June 1, $3,900,000 on December 31.
Flint Company borrowed $1,300,000 on March 1 on a 5 year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5 year, $2,600,000 note payable and an 11%, 4 year, $4,550,000 note payable. Compute the avoidable interest for Flint Company. Use the weighted average interest rate for interest capitalization purposes.
Find the avoidable interest.
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