Capitalized Interest: Multiple Year Computation
Refer to Practice 10 6. Assume that construction was not completed on December 31 of Year 1. Also assume that the same loans were outstanding for all of Year 2.The following expenditure was made during Year 2:
July 1 |
$500,000 |
Final construction was completed on December 31 of Year 2. Compute (1) the amount of interest capitalized during Year 2 and (2) the recorded cost of the building at the end of Year 2.
Practice 10 6
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.