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Hi, I'm an accounting student and I have been trying for about 2 hours, but I cannot get this question on my homework right. In desperation, I have come here for help. If any of you could tell me how to do this, I'd be super grateful!
On January 1, 2011, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2012.
Expenditures on the project were as follows:
January 1, 2011 $ 1,000,000
March 1, 2011 600,000
June 30, 2011 800,000
October 1, 2011 600,000
January 31, 2012 270,000
April 30, 2012 585,000
August 31, 2012 900,000
On January 1, 2011, the company obtained a $3 million construction loan with a 10% interest rate. The loan was outstanding all of 2011 and 2012. The company’s other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2011 and 2012. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.
I'm supposed to calculate the interest to be capitalized for 2011 and 2012 using the specific interest method, then calculate the total cost of the building and then the interest expenses for both years.
Thanks.
On January 1, 2011, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2012.
Expenditures on the project were as follows:
January 1, 2011 $ 1,000,000
March 1, 2011 600,000
June 30, 2011 800,000
October 1, 2011 600,000
January 31, 2012 270,000
April 30, 2012 585,000
August 31, 2012 900,000
On January 1, 2011, the company obtained a $3 million construction loan with a 10% interest rate. The loan was outstanding all of 2011 and 2012. The company’s other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2011 and 2012. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.
I'm supposed to calculate the interest to be capitalized for 2011 and 2012 using the specific interest method, then calculate the total cost of the building and then the interest expenses for both years.
Thanks.