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Determine the construction interest to be capitalized

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Question - Tuna Company is building a new office and conference center for $33,000,000. Payments were made to the contractor as follows:

Jan 1, 2015                           $ 6,000,000 for land

July 1, 2015                          $10,000,000

Sep 30, 2015                        $ 10,000,000

Dec 31, 2015                       $ 7,000,000

To finance their construction, Tuna borrowed a construction loan of $9,000,000 on January 1, 2015 at 9% per year. Tuna has two other long term debts for the entire year of 2015:

Loan A                                      $ 5,000,000      11%      

Loan B                                      $15,000,000      6%       

Determine the construction interest to be capitalized and the interest to be expensed for 2015.

Reference no: EM131702648

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