Question
Stone Company began constructing a building on January 1, 2000. The project is expected to last 3 years and is expected to cost $5,500,000 to
Stone Company began constructing a building on January 1, 2000. The project is expected to last 3 years and is expected to cost $5,500,000 to complete. Actual expenditures for 2000 include:
$1,800,000 on January 1 $600,000 on May 1 $210,000 on October 1 $250,000 on December 31
Stone Company had outstanding all year an 8%, 5-year, $2,000,000 note payable and a 10%, 3-year, $500,000 note payable. Stone realized it would need additional debt to finance the project and borrowed a 12% note for $1,500,000 on January 1st, 2000.
Part A: Compute the amount of interest that should be capitalized to PPE in 2000 by Stone Company.
A. 390,000
B. 2,102,500
C. 243,210
D. 50,610
E. 180,000
None of the above.
Part B: What is the balance sheet value of the building as of December 31, 2000 (including capitalized interest)?
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