Vania Magazines started construction of a warehouse building for its own use at an estimated cost of $5,000,000 on January 1,
Vania Magazines started construction of a warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2019, and completed the building on December 31, 2019. During the construction period, Vania has the following debt obligations outstanding.
| Construction loan—12% interest, payable semiannually, issued December 31, 2018 | $2,000,000 | ||
| Short-term loan—10% interest, payable monthly, and principal payable at maturity, on May 30, 2020 | 1,400,000 | ||
| Long-term loan—11% interest, payable on January 1 of each year; principal payable on January 1, 2022 | 1,000,000 |
Total cost amounted to $5,200,000, and the weighted average of accumulated expenditures was $3,500,000.
Jane Esplanade, the president of the company, has been shown the costs associated with this construction project and capitalized on the
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