Business, 25.04.2020 01:53 mallyosburn

Capitalization of interest:

During 2014, Barden Building Company constructed various assets at a total cost of $12,600,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2014 were $8,400,000. The company had the following debt outstanding at December 31, 2014:

1.

10%, 5-year note to finance construction of various assets,

dated January 1, 2014, with interest payable annually on January 1

$5,400,000

2.

12%, ten-year bonds issued at par on December 31, 2008, with interest

payable annually on December 31

6,000,000

3.

9%, 3-year note payable, dated January 1, 2013, with interest payable

annually on January 1

3,000,000

Instructions

Compute the amounts of each of the following (show computations).

1.

Avoidable interest.

2.

Total interest to be capitalized during 2014.

Answers: 3

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Capitalization of interest:

During 2014, Barden Building Company constructed various as...