On January 1, 2023, GreenEco Corporation contracted Blue Builders to construct a new eco-friendly shopping mall for
Question:
On January 1, 2023, GreenEco Corporation contracted Blue Builders to construct a new eco-friendly shopping mall for $5,000,000. GreenEco made payments for the construction as follows: March 1, $1,000,000, June 1, $2,000,000, and December 31, $2,000,000. The construction was completed, and the shopping mall was ready for operation on December 31, 2023. GreenEco had the following outstanding debt as of December 31, 2023:
i) A 10% four-year note to finance construction of the shopping mall, dated December 31, 2022, with interest payable annually on December 31. Principal amount: $3,000,000.
ii) A 7% six-year note payable, dated December 31, 2021, with interest payable annually on December 31. Principal amount: $1,800,000.
iii) 11% ten-year bonds issued on December 31, 2019, with interest payable annually on December 31. Principal amount: $1,200,000.
Required:
i) Determine the amount of interest to be capitalized in 2023 in relation to the construction of the shopping mall.
ii) Prepare journal entries for GreenEco Corporation during 2023.