Chapter 10, Problem 10.25E

Interest capitalization; multiple periods

• LO10–7

Thornton Industries began construction of a warehouse on July 1, 2018. The project was completed on March 31, 2019. No new loans were required to fund construction. Thornton does have the following two interest-bearing liabilities that were outstanding throughout the construction period:

$2,000,000, 8% note

$8,000,000, 4% bonds

Construction expenditures incurred were as follows:

July 1, 2018	$400,000
September 30, 2018	600,000
November 30, 2018	600,000
January 30, 2019	540,000

The company’s fiscal year-end is December 31.

Required:

Calculate the amount of interest capitalized for 2018 and 2019.