On January 1, 2022, the Spartan Equipment Company began construction of a building to be used as its office headquarters. The building was completed on October 30, 2023. Expenditures on the project, mainly payments to subcontractors, were as follows: January 1, 2022 $ 600,000 April 30, 2022 750,000 December 31, 2022 600,000 Accumulated expenditures at December 31, 2022 (before interest capitalization) $ 1,950,000 January 31, 2023 600,000 October 30, 2023. 300,000 On January 1, 2022, the company obtained a $1 million construction loan with an 8% interest rate. The loan was outstanding during the entire construction period. The company's other interest-bearing debt included two long-term notes of $2,000,000 and $4,000,000 with interest rates of 6% and 12%, respectively. Both notes were outstanding during the entire construction period. 1. Calculate capitalized interest in 2022. 2. Calculate capitalized interest in 2023. 3. Assuming the $1 million loan was not for the construction of the building, calculate capitalized interest in 2022.
On January 1, 2022, the Spartan Equipment Company began construction of a building to be used as its office headquarters. The building was completed on October 30, 2023. Expenditures on the project, mainly payments to subcontractors, were as follows: January 1, 2022 $ 600,000 April 30, 2022 750,000 December 31, 2022 600,000 Accumulated expenditures at December 31, 2022 (before interest capitalization) $ 1,950,000 January 31, 2023 600,000 October 30, 2023. 300,000 On January 1, 2022, the company obtained a $1 million construction loan with an 8% interest rate. The loan was outstanding during the entire construction period. The company's other interest-bearing debt included two long-term notes of $2,000,000 and $4,000,000 with interest rates of 6% and 12%, respectively. Both notes were outstanding during the entire construction period. 1. Calculate capitalized interest in 2022. 2. Calculate capitalized interest in 2023. 3. Assuming the $1 million loan was not for the construction of the building, calculate capitalized interest in 2022.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2022, the Spartan Equipment Company began construction of a building to be used as its office
headquarters. The building was completed on October 30, 2023. Expenditures on the project, mainly payments to
subcontractors, were as follows:
January 1, 2022
$
600,000
April 30, 2022
750,000
December 31, 2022
600,000
Accumulated expenditures at December 31, 2022 (before interest
capitalization)
$ 1,950,000
January 31, 2023
600,000
October 30, 2023.
300,000
On January 1, 2022, the company obtained a $1 million construction loan with an 8% interest rate. The loan was
outstanding during the entire construction period. The company's other interest-bearing debt included two long-term
notes of $2,000,000 and $4,000,000 with interest rates of 6% and 12%, respectively. Both notes were outstanding
during the entire construction period.
1. Calculate capitalized interest in 2022.
2. Calculate capitalized interest in 2023.
3. Assuming the $1 million loan was not for the construction of the building, calculate capitalized interest in 2022.
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