Using the specific interest method

Assignment Help Financial Accounting

Reference no: EM131295588

On January1,2013 the Mason manufacturing company began construction of a building to be used as its office headquarters. The building was completed on Septembet30, 2014.

Expenditures on the project was followings:

Jan3 2013 1,000,000

March1 2013 600,000

June30,2013 800,000

October1 2013 600,000

January31 2014 270,000

April30 2014 585,500

August31 ,2014 900,000

On january1 2013 the company obtained a 3 million construction loan with 10% interest rate. The loan was outstanding all of 2013 and 2014. The company's other interest-bearing debt included two long-term noted of 4,000,000 and 6,000,000 with interest rates of 6% and 8% respectively. Both notes were outstanding during all of 2013 and 2014. Interest is paod annually on all debt.

1. Calculate the amount of interest that Mason should capitalize in 2013 and 201r using the specific interest method

2. What is total cost of building

3. Calculate the amount of interest expense that will apprear in the 2013 and 2p14 income statement.

Reference no: EM131295588

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