Question
On December 31, 2009, Hurston Inc. borrowed $3,000,000 at 12% payable annually to finance the construction of a new building. In 2010, the company made
On December 31, 2009, Hurston Inc. borrowed $3,000,000 at 12% payable annually to finance the construction of a new building. In 2010, the company made the following expenditures related to this building: March 1, $360,000; June 1, $600,000; July 1, $1,500,000; December 1, $1,200,000. Additional information is provided as follows. 1. Other debt outstanding 10-year, 11% bond, December 31, 2003, interest payable annually 6-year, 10% note, dated December 31, 2007, interest payable annually 2. March 1, 2010, expenditure included land costs of $150,000 3. Interest revenue earned in 2010 on funds related to specific borrowing $49,000
Instructions
Determine the amount of interest to be capitalized in 2010 in relation to the construction of the building.
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