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Determine the amount of interest to be capitalized

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Reference no: EM132316661

Question

On December 31, 2016, Sheridan Inc. borrowed $4,020,000 at 13% payable annually to finance the construction of a new building. In 2017, the company made the following expenditures related to this building: March 1, $482,400; June 1, $804,000; July 1, $2,010,000; December 1, $2,010,000. The building was completed in February 2018.

Additional information is provided as follows.

1.Other debt outstanding 10-year, 14% bond, December 31, 2010, interest payable annually$5,360,0006-year, 11% note, dated December 31, 2014, interest payable annually$2,144,000

2.March 1, 2017, expenditure included land costs of $201,000

3.Interest revenue earned in 2017$65,660

Determine the amount of interest to be capitalized in 2017 in relation to the construction of the building.

Reference no: EM132316661

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