Capitalized Interest: Single Year Computation
The company had the following loans outstanding for the entire year:
|
Amount |
Interest Rate |
|
|
Specific construction loan |
$100,000 |
10% |
|
General loan |
2,000,000 |
12 |
The company began the self construction of a building on January 1. The following expenditures were made during the year:
|
1 Jan |
$100,000 |
|
1 May |
200,000 |
|
1 Nov |
300,000 |
|
Total |
$600,000 |
Construction was completed on December 31. Compute (1) the amount of interest capitalized during the year and (2) the recorded cost of the building at the end of the year.