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Determine the amount of interest to be capitalized

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Question - On January 1, 2020 Fascination Corporation decided to construct a piece of machinery for their state-of-the-art assembly line. The new assembly line was ready for full operation on December 31, 2020. The cost of the machinery is $1,500,000. The following expenditures were made during 2020.

January 1 $300,000

April 1 $540,000

June 1 $450,000

December 1 $210,000

Total Expenditures $1,500,000

During the year the company had the following debt outstanding during the entire year:

-15%, 3-year note to finance the construction of the machinery $750,000

-10%, 5-year note classified as general debt $550,000

-12%, 10-year note classified as general debt $600,000

Determine the amount of interest to be capitalized? In order to receive full credit, your answer should include a calculation of actual interest.

Reference no: EM132911434

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