A building was constructed last year for Agro Co. for use as a production facility....
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Accounting
A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows.
Date
Payment
1/1
$500,000
4/1
600,000
8/1
800,000
10/1
500,000
To finance construction of the building, a $850,000, 10% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $600,000 note payable, 9% annual interest, and $800,000 par value bonds, 7.5% annual interest.
Determine the amount of interest to be capitalized.
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