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On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2019. The
On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2019. The company borrowed $1,800,000 at 7% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2018:
$9,000,000, 12% bonds | |
$6,000,000, 7% long-term note | |
Construction expenditures incurred during 2018 were as follows:
January 1 | $ | 780,000 | |
March 31 | 1,380,000 | ||
June 30 | 1,016,000 | ||
September 30 | 780,000 | ||
December 31 | 580,000 | ||
Required:
Required Calculate the amount of interest capitalized for 2018 using the specific interest method. (Do not round the intermediate calculations Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).) Date Expenditure Weight Average January 1 March 31 June 30 September 30 December 31 Accumulated expenditure Capitalize Interest Average Interest Rate Average accumulated expenditures $Step by Step Solution
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