On December 31, 2019, Riverbed Inc. borrowed $3,660,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $439,200; June 1, $732,000; July 1, $1,830,000; December 1, $1,830,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $4,880,000 6-year, 11% note, dated December 31, 2017, interest payable annually $1,952,000 2. March 1, 2020, expenditure included land costs of $183,000 3. Interest revenue earned in 2020 $59,780 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building.
On December 31, 2019, Riverbed Inc. borrowed $3,660,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $439,200; June 1, $732,000; July 1, $1,830,000; December 1, $1,830,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $4,880,000 6-year, 11% note, dated December 31, 2017, interest payable annually $1,952,000 2. March 1, 2020, expenditure included land costs of $183,000 3. Interest revenue earned in 2020 $59,780 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On December 31, 2019, Riverbed Inc. borrowed $3,660,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $439,200; June 1, $732,000; July 1, $1,830,000; December 1, $1,830,000. The building was completed in February 2021. Additional information is provided as follows.
| 1. | Other debt outstanding | |||
| 10-year, 14% bond, December 31, 2013, interest payable annually | $4,880,000 | |||
| 6-year, 11% note, dated December 31, 2017, interest payable annually | $1,952,000 | |||
| 2. | March 1, 2020, expenditure included land costs of $183,000 | |||
| 3. | Interest revenue earned in 2020 | $59,780 |
Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building.
| The amount of interest |
$
|
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