Reference no: EM13999330

On January 2, 2011, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2012. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2011:

$5,000,000, 12% bonds
$3,000,000, 8% long-term note

Construction expenditures incurred during 2011 were as follows:

January 1 ........$ 600,000
March 31 ........$ 1,200,000
June 30 ........$ 800,000
September 30 .......$ 600,000
December 31 ......$ 400,000

Required:

Calculate the amount of interest capitalized for 2011 using the specific interest method.