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Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January
Interest During Construction
Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were:
January 1 | $252,000 | (includes cost of purchasing land of $150,000) |
May 1 | 310,000 | |
July 1 | 420,000 | |
October 31 | 280,000 |
In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year.
Required:
- Compute the amount of interest capitalized related to the construction of the building.
$fill in the blank 1
- If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures
$fill in the blank 2
Compute the amount of interest capitalized on the building$fill in the blank 3
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