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Compute the amount of interest costs capitalized each year

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Reference no: EM132700457

Question - Interest During Construction

Ventry Company is constructing a production complex that qualifies for interest capitalization. The following information is available:

Capitalization period:

January 1, 2016, to June 30, 2017

Expenditures on project:

2016: January 1 - $ 564,000

May 1 - 537,000

October 1 - 528,000

2017: March 1 - $ 1,536,000

June 30 564,000

Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project

$4 million borrowed on July 1, 2015, at 12%

$16 million borrowed on January 1, 2011, at 6%

Required -

1. Compute the amount of interest costs capitalized each year.

2. If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2017.

Reference no: EM132700457

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