Aries Company started construction on a building on January 1 of this year and completed construction on December 31 of the same year. Aries had only two interest notes outstanding during the year and both of these notes were outstanding for all 12 months of the year. The following information is available: Average accumulated expenditures 250,000 Ending balance in construction in progress before capitalization of interest 360,000 6 percent note incurred specifically for the project 150,000 9 percent long term note 500,000 What amount of interest should Aries capitalize for the current year? a. 27,900 b. 22,500 c. 18,000 d. 15,000 What is the solution for option C?
Aries Company started construction on a building on January 1 of this year and completed construction on December 31 of the same year. Aries had only two interest notes outstanding during the year and both of these notes were outstanding for all 12 months of the year. The following information is available: Average accumulated expenditures 250,000 Ending balance in construction in progress before capitalization of interest 360,000 6 percent note incurred specifically for the project 150,000 9 percent long term note 500,000 What amount of interest should Aries capitalize for the current year? a. 27,900 b. 22,500 c. 18,000 d. 15,000 What is the solution for option C?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Aries Company started construction on a building on January 1 of this year and completed construction on December 31 of the same year. Aries had only two interest notes outstanding during the year and both of these notes were outstanding for all 12 months of the year. The following information is available:
| Average accumulated expenditures | 250,000 |
| Ending balance in construction in progress before capitalization of interest | 360,000 |
| 6 percent note incurred specifically for the project | 150,000 |
| 9 percent long term note | 500,000 |
What amount of interest should Aries capitalize for the current year?
a. 27,900
b. 22,500
c. 18,000
d. 15,000
What is the solution for option C?
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