Reference no: EM133160346
Question - The following three situations involve the capitalization of interest.
Situation - On January 1. 2017, Tamarisk, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,266,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Tamarisk borrowed $4,266,000 payable in 10 annual installments of $426,600, plus interest at the rate of 10%. During 2017, Tamarisk made deposit and progress payments totaling $1,599,750 under the contract: the weighted-average amount of accumulated expenditures was $853,200 for the year. The excess borrowed funds were invested in short- term securities, from which Tamarisk realized investment income of $258,200.
Required - What amount should Tamarisk report as capitalized interest at December 31, 2017?
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