Calculate the interest to be capitalized

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Reference no: EM131264017

Sunshine Holdings began construction on a new building on January 1, 2006. The building was completed and became ready for use on May 31, 2008. At the end of 2006 Sunshine had the following types of debt outstanding:

A $2.5 million construction loan with a 6% annual interest rate

A $17 million general loan with a 9% annual interest rate

A $28 million general note with a 11% annual interest rate

Sunshine incurred the following annual construction expendiures per year:

Year Date Amount

2006 1/1/2006 $2,125,000

6/30/2006 $4,500,000

12/31/2006 $2,125,000

Calculate the interest to be capitalized in 2006 and include the applicable entry to record capitalized interest for 2006.

Reference no: EM131264017

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