Clay Company started construction of a new office building on January 1, year 4, and moved into the finished building on July 1, year 5. Of the building's $2,500,000 total cost, $2,000,000 was incurred in year 4 evenly throughout the year. Clay's incremental borrowing rate was 12% throughout year 4, and the total amount of interest incurred by Clay during year 4 was $102.000. What amount should Clay report as capitalized interest at December 31, year 4? O $150,000 O $240,000 O $102,000 O $120,000
Clay Company started construction of a new office building on January 1, year 4, and moved into the finished building on July 1, year 5. Of the building's $2,500,000 total cost, $2,000,000 was incurred in year 4 evenly throughout the year. Clay's incremental borrowing rate was 12% throughout year 4, and the total amount of interest incurred by Clay during year 4 was $102.000. What amount should Clay report as capitalized interest at December 31, year 4? O $150,000 O $240,000 O $102,000 O $120,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Clay Company started construction of a new office building on January 1, year 4, and moved into the finished building on July 1, year 5.
Of the building's $2,500,000 total cost, $2,000,000 was incurred in year 4 evenly throughout the year. Clay's incremental borrowing
rate was 12% throughout year 4, and the total amount of interest incurred by Clay during year 4 was $102.000. What amount should
Clay report as capitalized interest at December 31, year 4?
O $150,000
O $240,000
O $102,000
O $120,000
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