Question
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $2,400,000 at 6% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021:
$8,000,000, 11% bonds | |
$2,000,000, 6% long-term note | |
Construction expenditures incurred during 2021 were as follows:
January 1 | $ | 980,000 | |
March 31 | 1,580,000 | ||
June 30 | 1,256,000 | ||
September 30 | 980,000 | ||
December 31 | 780,000 | ||
Required: Calculate the amount of interest capitalized for 2021 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%).)
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