Calculate amount of interest that omicron should capitalize

Reference no: EM132719361

Question: At the end of 2017, Tractor Company purchase a tract of land for $100,000 as a building site. On Jan 1, 2018, Tractor Co obtained an $800,000 loan with a 6% interest rate. The company's other interest bearing debt included two long term notes of $1m and $3m with interest rates 12% and 8% respectively.

2018 construction expenditures:

Date Payment

Jan 1. $100,000

May 1. $1,200,000

July 31. $1,500,000

Sep 1. $750,000

The new office building became ready for use on Dec 31, 2018.

- Calculate the amount of interest that Omicron should capitalize in 2018.

- What is the total value of the building at Dec 31, 2018?

- How much interest expense will Omicron recognize in its 2018 income statement?

Reference no: EM132719361

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