Calculate the amount of interest capitalized for the year

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Question - A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $650,000; March 31, $750,000; June 30, $550,000; October 30, $1,050,000. The company arranged a 10% loan on January 1 for $1,000,000. Assume the $1,000,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 13% and 11%, respectively.

Required - Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year.

Reference no: EM132528834

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