On January the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September Expenditures on the project were as follows:
January $
March
June
October
January
April
August
On January the company obtained a $ construction loan with a interest rate. The loan was outstanding all of and The companys other interestbearing debt included two longterm notes of $ and $ with interest rates of and respectively. Both notes were outstanding during all of and Interest is paid annually on all debt. The companys fiscal yearend is December
Required:
Calculate the amount of interest that Mason should capitalize in and using the specific interest method.
What is the total cost of the building?
Calculate the amount of interest expense that will appear in the and income statements.
