P10.7 (LO2) 102) Groupwork (Capitalization of Interest) Laser werden had been operating in its original facility tinuing education requirements in several prof OF Laserwords since 2015. Laserwords' original facility beca increased sales volume and the fact that Laserwo On June 1, 2020, Laserwords contracted with B for $4,000,000 on land owned by Laserwords. The payments made are shown in the schedule below user words Inc. is a book distributor that Binal facility since 1990. The increase in certification programs and con- in several professions has contributed to an annual growth rate of 15% words original facility became obsolete by early 2020 because of the met that Laserwords now carries CDs in addition to books. words contracted with Black Construction to have a new building constructed y Laserwords. The payments made by Laserwords to Black Construction Date Amount July 30, 2020 $ 900,000 January 30, 2021 1,500,000 May 30, 2021 1,600,000 Total payments $4,000,000 Construction was completed and the building was had no new borrowings directly associated w as completed and the building was ready for occupancy on May 27, 2021. Laserwords owings directly associated with the new building but had the following debt outstanding at May 31, 2021, the end of its fiscal year. 10%, 5-year note na 0, 3year note payable of $2,000,000, dated April 1, 2017. with interest payable annually on April 270, 10-year bond issue of $3,000,000 sold at par on June 30, 2013, with interest payable annually on June 30. The new building qualifies for interest capitalization. The effect of capitalizing the interest on the new building, compared with the effect of expensing the interest, is material. Instructions a. Compute the weighted-average accumulated expenditures on Laserwords' new building during the capitalization period. b. Compute the avoidable interest on Laserwords' new building. (Round to one decimal place.) c. Some interest cost of Laserwords Inc. is capitalized for the year ended May 31, 2021. 1. Identify the items relating to interest costs that must be disclosed in Laserwords' financial statements. 2. Compute the amount of each of the items that must be disclosed. (CMA adapted)