Capitalization of interest During 2020, Barden Building Company constructed various assets at a total cost of: $14,700,000 The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2020 were: $9,800,000 The company had the following debt outstanding at December 31, 2020: (Hint : specific construction debt) 1. 10%, 5-year note to finance construction of various assets, dated January 1, 2020, with interest payable annually on January 1 $6,300,000 (Hint : other debt) 2. 12%, ten-year bonds issued at par on December 31, 2014, with interest payable annually on December 31 $7,000,000 3. 9%, 3-year note payable, dated January 1, 2019, with interest payable annually on January 1 $3,500,000 Given: Weighted Average Accumulated Expenditures $6,300,000 3,500,000 $9,800,000 Instructions Compute the amounts of each of the following (show computations). Avoidable interest. Total interest to be capitalized during 2020.
Capitalization of interest
During 2020, Barden Building Company constructed various assets at a total cost of: $14,700,000
The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2020 were: $9,800,000
The company had the following debt outstanding at December 31, 2020:
(Hint : specific construction debt)
1. 10%, 5-year note to finance construction of various assets, dated January 1, 2020, with interest payable annually on January 1 $6,300,000
(Hint : other debt)
2. 12%, ten-year bonds issued at par on December 31, 2014, with interest payable annually on December 31 $7,000,000
3. 9%, 3-year note payable, dated January 1, 2019, with interest payable annually on January 1 $3,500,000
Given: Weighted Average
Accumulated
Expenditures
$6,300,000
3,500,000
$9,800,000
Instructions
Compute the amounts of each of the following (show computations).
- Avoidable interest.
- Total interest to be capitalized during 2020.
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