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On January 1, 2019, Champaign Compan a specialized piece of machinery that Champaign needed order to finance the construction, Champa annual interest. The company had
On January 1, 2019, Champaign Compan a specialized piece of machinery that Champaign needed order to finance the construction, Champa annual interest. The company had other interes 2019, with a weighted average interest rate of 12% Cash expenditures para manufacture the machinery during 2019 toti place evenly throughout 2019, but rather were made as follows: ampaign Company employed Urbana Building Company to manufacture y that Champaign needed in its own manufacturing plant. In onstruction, Champaign borrowed $400,000 on January 1, 2019 at 10% company had other interest-bearing liabilities of $600,000 during all of ge interest rate of 12% Cash expenditures paid to Urbana to machinery during 2019 totaled $500 000 The cash expenditures did not take Date January 1 October 1 Cash expenditure $200,000 300.000 Total $500,000 Required: (1) As mentioned above, the cash expenditures for the construction of the building did not take place evenly throughout 2019. However, some of the interest on debt incurred in 2019 did qualify for capitalization. The first step in determining the amount of interest to be capitalized is to calculate the average accumulated cash expenditures for the construction of the specialized machinery for 2019. Showing work, place that calculation below. (2) Using your answer in (1) above, what is the total amount of interest that can be capitalized for the construction of the specialized machinery for the year ended December 31, 2019? Show work
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