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Determine how much interest would be capitalized

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Question - Prairie Co. is in the process of constructing a new building. The following data pertains to the project:

Year 1- Expenditures

January 1 $700,000

May 1 $900,000

November 1 $400,000

Year 2- Expenditures

March 1- $700,000

September 1- $600,000

The project was completed on September 30.

Outstanding company debt:

Mortgage related to construction; 10% $1,300,000

Bond issued prior to construction; 7% $900,000

Bond issued prior to construction; 6% $800,000.

Required- Determine how much interest would be capitalized in Year 1 and 2.

Reference no: EM132052407

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