III. Interest Cost Capitalization

On January 2, 2017, Indian River Groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2018. Expenditures for the construction were as follows:

January 2, 2017 $ 600,000

September 1, 2017 1,800,000

December 31, 2017 1,800,000

March 31, 2018 1,800,000

September 30, 2018 1,200,000

Indian River Groves borrowed $3,300,000 on a construction loan at 12% interest on January 2, 2017. This loan was outstanding during the construction period. The company also had $12,000,000 in 9% bonds outstanding in 2017 and 2018.

Instructions: Calculate the interest capitalized for 2017.