Solution-Compute the amount of interest that should be

Compute the amount of interest that should be capitalized

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Reference no: EM132769309

Culiver, Inc. is constructing a building that qualifies for interest capitalization. The following information is available:

Capitalization period: January 1, 2016-December 31, 2017 Expenditures on project (incurred evenly):

2016 $20,000
2017 $60,000

Amounts borrowed and outstanding (all debt incurred January 1, 2016):

$10,000 at 10% (specifically for the construction project)
$18,000 at 12% (general debt)
$30,000 at 14% (general debt)

Required:

Problem 1: Compute the amount of interest that should be capitalized in 2016 and 2017. (Round interest rates to the nearest hundredths, e.g., 07.62%.)

Problem 2: Assume that in 2016 unused borrowed funds were invested and earned interest revenue amounting to $600. How much interest should be capitalized to the asset account in 2017?

Reference no: EM132769309

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Compute the amount of interest that should be capitalized

Reference no: EM132769309

Reference no: EM132769309

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