On January 1, 2024, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2025. The company borrowed $1,500,000 at 10% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2024: $8,000,000, 15% bonds $2,000,000, 10% long-term note Construction expenditures incurred during 2024 were as follows: January 1 March 31 June 30 September 30 December 31 $ 660,000 1,260,000 872,000 660,000 460,000 Required: Calculate the amount of interest capitalized for 2024 using the specific interest method. Note: Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).
On January 1, 2024, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2025. The company borrowed $1,500,000 at 10% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2024: $8,000,000, 15% bonds $2,000,000, 10% long-term note Construction expenditures incurred during 2024 were as follows: January 1 March 31 June 30 September 30 December 31 $ 660,000 1,260,000 872,000 660,000 460,000 Required: Calculate the amount of interest capitalized for 2024 using the specific interest method. Note: Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
H1.
Transcribed Image Text:On January 1, 2024, the Highlands Company began construction on a new manufacturing facility for its own use. The building was
completed in 2025. The company borrowed $1,500,000 at 10% on January 1 to help finance the construction. In addition to the
construction loan, Highlands had the following debt outstanding throughout 2024:
$8,000,000, 15% bonds
$2,000,000, 10% long-term note
Construction expenditures incurred during 2024 were as follows:
January 1
March 31
June 30
September 30
December 31
$ 660,000
1,260,000
872,000
660,000
460,000
Required:
Calculate the amount of interest capitalized for 2024 using the specific interest method.
Note: Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered
as 12.3%).
Transcribed Image Text:Date
January 1
March 31
June 30
September 30
December 31
Accumulated expenditure
Average accumulated
expenditures
Expenditure
$
SA
Amount
0
0
X
X
X
X
X
X
X
Weight
Interest Rate
%
%
=
||
=
||
=
=
=
||
=
=
Average
$
Capitalized
Interest
CA
0
0
0
0
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