What is the total value of the building at Dec

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Question - At the end of 2017, Tractor Company purchase a tract of land for $100,000 as a building site. On Jan 1, 2018, Tractor Co obtained an $800,000 loan with a 6% interest rate. The company's other interest bearing debt included two long term notes of $1m and $3m with interest rates 12% and 8% respectively.

2018 construction expenditures:

Date - Payment

Jan 1. $100,000

May 1. $ 1,200,000

July 31. $ 1,500,000

Sep 1. $750,000

The new office building became ready for use on Dec 31, 2018.

Required -

1. Calculate the amount of interest that Omicron should capitalize in 2018.

2. What is the total value of the building at Dec 31, 2018?

3. How much interest expense will Omicron recognize in its 2018 income statement?

Reference no: EM132708699

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