Question
On June 1, 2020, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2021. Expenditures on the
On June 1, 2020, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2021. Expenditures on the project were as follows ($ in millions):
July 1, 2020 | 56 |
October 1, 2020 | 24 |
February 1, 2021 | 32 |
April 1, 2021 | 22 |
September 1, 2021 | 21 |
October 1, 2021 | 7 |
On July 1, 2020, Crocus obtained a $72 million construction loan with a 7% interest rate. The loan was outstanding through the end of October, 2021. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 9%. This note was outstanding during all of 2020 and 2021. The company's fiscal year-end is December 31. What is the amount of interest that Crocus should capitalize in 2021, using the specific interest method?
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