Mark is a book distributor that had been operating in its original facility since 1985. The increase in certification programs and continuing education requirements in several professions has contributed to an annual growth rate of 15% for Wiley since 2014. Mark original facility became obsolete by early 2019 because of the increased sales volume and the fact that Wiley now carries CDs in addition to books.

On June 1, 2019, Mark contracted with Black Construction to have a new building constructed for $4,000,000 on land owned byMark. The payments made by Mark to Black Construction are shown in the schedule below.

Date	Amount
June 30, 2019	$900,000
January 30, 2020	$1,500,000
May 30, 2020	$1,600,000
Total payments	$4,000,000

Construction was completed, and the building was ready for occupancy on May 27, 2020. Wiley had no new borrowings directly associated with the new building but had the following debt outstanding at May 31, 2020, the end of its fiscal year.

• 13%, 5-year note payable of $2,000,000, dated April 1, 2016, with interest payable annually on April 1.
• 15%, 10-year bond issue of $3,000,000 sold at par on June 30, 2012, with interest payable annually on June 30.

The new building qualifies for interest capitalization. The effect of capitalizing the interest on the new building, compared with the effect of expensing the interest, is material.

Instructions

a. Compute the weighted-average accumulated expenditures on Wileys new building during the capitalization period.

b. Compute the avoidable interest on Marks new building.

c. Some interest cost of Marks Inc. is capitalized for the year ended May 31, 2020.

1. Identify the items relating to interest costs that must be disclosed in Marks financial statements.

2. Compute the amount of each of the items that must be disclosed.