Interest During Construction Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $252,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 450,000 October 31 280,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: Compute the amount of interest capitalized related to the construction of the building. $ If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures
Interest During Construction Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $252,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 450,000 October 31 280,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: Compute the amount of interest capitalized related to the construction of the building. $ If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Interest During Construction
Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were:
| January 1 | $252,000 | (includes cost of purchasing land of $150,000) |
| May 1 | 310,000 | |
| July 1 | 450,000 | |
| October 31 | 280,000 |
In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year.
Required:
- Compute the amount of interest capitalized related to the construction of the building.
$ - If the expenditures are assumed to have been incurred evenly throughout the year:
Compute weighted average accumulated expenditures$
Compute the amount of interest capitalized on the building$
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