Tab Caps Shift Q 8.31 (203) E Fri A W Z S E Date January 1, 2020 August 31, 2020 December 31, 2020 Total payments X Alt D R F $ T V G Question 2 (Capitalization of interest )(22 marks) Phipps Inc. is a large scale bakery. On Jan 1, 2020, Phipps contracted with Cakes Construction to have a new bakery constructed for $2,000,000 on land owned by Phipps. The payments made by Phipps to Cakes Construction are shown in the schedule below. Amount 500,000 840,000 660,000 $2,000,000 Y B assuming H 1 S. Pear 30 X N ZIFFR Construction was completed and the building was ready for occupancy on January 1, 2021.) Phipps had no new borrowings directly associated with the new building but had the following debt outstanding at the end of 2019. for 8%, 10-year note payable of $1,000,000, dated January 1, 2014. 6%, 20-year bond issue of $2,000,000 sold at par on July 1, 2006. 128 the new building qualifies for interest capitalization. The effect of capitalizing the interest on the new building, compared with the effect of expe