Reference no: EM133059474
Question - Indigo Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $ 5,400,000 on March 1, $ 3,600,000 on June 1, and $ 9,000,000 on December 31.
Indigo Company borrowed $ 3,000,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $ 6,000,000 note payable and an 11%, 4-year, $ 10,500,000 note payable. Compute avoidable interest for Indigo Company. Use the weighted-average interest rate for interest capitalization purposes.
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