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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, $700,000; March 31, $800,000; June 30, $600,000; October 30, $1,200,000. To help finance construction, the company arranged a 8% construction loan on January 1 for $1,100,000. The company's other borrowings, outstanding for the whole year, consisted of a $7 million loan and a $9 million note with interest rates of 10% and 6%, respectively. Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year.

Reference no: EM132750068

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