Question
On June 1, 2015, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2016. Expenditures on the
On June 1, 2015, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2016. Expenditures on the project were as follows ($ in millions):
July 1, 2015 | 54 |
October 1, 2015 | 22 |
February 1, 2016 | 30 |
April 1, 2016 | 21 |
September 1, 2016 | 20 |
October 1, 2016 | 6 |
On July 1, 2015, Crocus obtained a $70 million construction loan with a 6% interest rate. The loan was outstanding through the end of October, 2016. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8%. This note was outstanding during all of 2015 and 2016. The company's fiscal year-end is December 31. What is the amount of interest that Crocus should capitalize in 2015, using the specific interest method?
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