Reference no: EM133057212

Question - Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2016, and was completed on October 31, 2016. Expenditures related to this building were:

January 1 $252,000 (includes cost of purchasing land of $150,000)

May 1 310,000

July 1 420,000

October 31 276,000

In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year.

Required -

1. Compute the amount of interest capitalized related to the construction of the building.

2. If the expenditures are assumed to have been incurred evenly throughout the year:

a. Compute weighted average accumulated expenditures $.

b. Compute the amount of interest capitalized on the building $.