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Calculate and present the amount of interest cost

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Question - On March 1, 2019, ABC Company purchased land for an office site by paying €540,000 cash. ABC began construction on the office building on March 1. The following expenditures were incurred for construction:

Date - Expenditures

March 1, 2019 - €360,000

April 1, 2019 - 504,000

May 1, 2019 - 900,000

June 1, 2019 - 1,440,000

The office was completed and ready for occupancy on July 1. To help pay for construction, €720,000 was borrowed on March 1, 2019 on a 9%, 3-year construction note payable. Other than the construction note, the only debt outstanding during 2015 was a €300,000, 12%, 6-year note payable dated January 1, 2019.

Instructions -

A - Calculate the weighted-average accumulated expenditures on the construction project during 2019.

B - Calculate actual interest cost incurred.

C - Assume that the weighted-average accumulated expenditures for the construction project are €920,000. Calculate and present the amount of interest cost to be capitalized during 2019.

Reference no: EM132544386

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