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Cooper, Inc., is constructing a building that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2013-December 31, 2014 Expenditures on project (incurred evenly): 2013 $30,000 2014 $50,000 Amounts borrowed and outstanding (all debt incurred January 1, 2013) $10,000 at 10% (specifically for the construction project) $18,000 at 11% (general debt) $30,000 at 13% (general debt)   What is the amount of interest that should be capitalized in 2014? a. $6,400 b. $6,600 c. $6,710 d. $6,910

Cooper, Inc., is constructing a building that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2013-December 31, 2014 Expenditures on project (incurred evenly): 2013 $30,000 2014 $50,000 Amounts borrowed and outstanding (all debt incurred January 1, 2013) $10,000 at 10% (specifically for the construction project) $18,000 at 11% (general debt) $30,000 at 13% (general debt)   What is the amount of interest that should be capitalized in 2014? a. $6,400 b. $6,600 c. $6,710 d. $6,910

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cooper, Inc., is constructing a building that qualifies for interest capitalization. The following information is available:


Capitalization period: January 1, 2013-December 31, 2014
Expenditures on project (incurred evenly):


2013 $30,000
2014 $50,000
Amounts borrowed and outstanding (all debt incurred January 1, 2013)


$10,000 at 10% (specifically for the construction project)
$18,000 at 11% (general debt)
$30,000 at 13% (general debt)

 

What is the amount of interest that should be capitalized in 2014?
a. $6,400
b. $6,600
c. $6,710
d. $6,910

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