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 | 58 |
October 1, 2020 | 26 |
February 1, 2021 | 34 |
April 1, 2021 | 23 |
September 1, 2021 | 22 |
October 1, 2021 | 8 |
On July 1, 2020, Crocus obtained a $74 million construction loan with a 8% 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 10%. 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 2020, using the specific interest method?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started