Hongkong Company decided to construct its own building. The total expenditures until completionamounted to 5,000,000 of which 1,000,000 was paid of January 2, 2007 and the remaining amount of4,000,000 was paid evenly throughout the year. A 10% note directly related to the project (specific borrowing) was issued on January 2, 2007 with a facevalue of 2,000,000. During 2007, borrowings not directly related to the project were: 5,000,000, 5-year, 12% note and 2,000,000, 3-year, 8.5% note. How much is the capitalized interest for 2007? a.970,000 b. 530,000 c. 310,000 d. 200,000
Hongkong Company decided to construct its own building. The total expenditures until completionamounted to 5,000,000 of which 1,000,000 was paid of January 2, 2007 and the remaining amount of4,000,000 was paid evenly throughout the year. A 10% note directly related to the project (specific borrowing) was issued on January 2, 2007 with a facevalue of 2,000,000. During 2007, borrowings not directly related to the project were: 5,000,000, 5-year, 12% note and 2,000,000, 3-year, 8.5% note. How much is the capitalized interest for 2007? a.970,000 b. 530,000 c. 310,000 d. 200,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hongkong Company decided to construct its own building. The total expenditures until completionamounted to 5,000,000 of which 1,000,000 was paid of January 2, 2007 and the remaining amount of4,000,000 was paid evenly throughout the year. A 10% note directly related to the project (specific borrowing) was issued on January 2, 2007 with a facevalue of 2,000,000. During 2007, borrowings not directly related to the project were: 5,000,000, 5-year, 12% note and 2,000,000, 3-year, 8.5% note.
How much is the capitalized interest for 2007?
a.970,000
b. 530,000
c. 310,000
d. 200,000
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