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- 4 E10-10 (Capitalization of Interest) The following three situations involve the capitalization of interest...

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- 4 E10-10 (Capitalization of Interest) The following three situations involve the capitalization of interest Situation ! On January 1, 2010, Columbia, Inc, signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,000,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2010, to finance the construction cost, Columbia borrowed $4,000,000 payable in 10 annual installments of $400,000 plus interest at the rate of 10%. During 2010. Columbia made deposit and progress payments totaling $1,500,000 under the contract the weighted average amount of accumu- lated expenditures was $900,000 for the year. The excess borrowed funds were invested in short-term securities, from which Columbia realized investment income of $50,000 Instructions D What amount should Columbia reports capitalived interest at December 31, 2013

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