On December 31, Concord Inc., a public company, borrowed $3 million at 12% payable annually to finance the construction of a new building. In 2024, the company made the following expenditures related to this building structure: March 1, $537,000; June 1, $654,000; July 1, $1.5 million (of which $399,000 was for the roof); December 1, $1.5 million (of which $705,000 was for the building HVAC).
On December 31, Concord Inc., a public company, borrowed $3 million at 12% payable annually to finance the construction of a new building. In 2024, the company made the following expenditures related to this building structure: March 1, $537,000; June 1, $654,000; July 1, $1.5 million (of which $399,000 was for the roof); December 1, $1.5 million (of which $705,000 was for the building HVAC).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Determine the interest amount that could be capitalized in 2024 in relation to the building construction.
Transcribed Image Text:On December 31, 2023, Concord Inc., a public company, borrowed $3 million at 12% payable annually to finance the
construction of a new building. In 2024, the company made the following expenditures related to this building structure:
March 1, $537,000; June 1, $654,000; July 1, $1.5 million (of which $399,000 was for the roof); December 1, $1.5 million (of
which $705,000 was for the building HVAC).
Additional information follows:
1.
2.
3.
Other debt outstanding:
$5-million, 10-year, 12% bond, dated December 31, 2016, with interest payable annually
$1.4-million, six-year, 11% note, dated December 31, 2020, with interest payable annually
The March 1, 2024 expenditure included land costs of $141,000.
Interest revenue earned in 2024 on the unused idle construction loan amounted to $54,400.
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