Assuming that the effects of interest capitalization are material, calculate the amount ofinterest costs to be capitalized by Matthew Corporation in 2014 in relation to the following events: On January 1, Matthew began construction for a new storage building for its own use. Expenditures incurred evenly throughout the year totaled $900,000. Matthew borrowed $1,000,000 specifically for construction of the storage building at an annual interest rate of 6%. What is the amount of interest that should be capitalized? a. $54,000 b. $27,000 c. $2,700 d. $0 Inventories costing $200,000 were routinely manufactured during the year. Matthew borrowed $200,000 at 8% to finance inventory-related costs. What is the amount of interest that should be capitalized? a. $16,000 b. $8,000 c. $800 d. $0 On September 1, Matthew began construction of a custom-designed machine to the specifications of a customer. As of December 31, $200,000 of materials, labor, and overhead have been assigned to the machine. Those costs were incurred evenly throughout the period September 1 through December 31. To finance construction, $230,000 was borrowed at a 9% interest rate. What is the amount of interest that should be capitalized? a. $18,000 b. $6,000 c. $9,000 d. $3,000
Assuming that the effects of interest capitalization are material, calculate the amount ofinterest costs to be capitalized by Matthew Corporation in 2014 in relation to the following events:
On January 1, Matthew began construction for a new storage building for its own use. Expenditures incurred evenly throughout the year totaled $900,000. Matthew borrowed $1,000,000 specifically for construction of the storage building at an annual interest rate of 6%. What is the amount of interest that should be capitalized?
a. $54,000
b. $27,000
c. $2,700
d. $0
Inventories costing $200,000 were routinely manufactured during the year. Matthew borrowed $200,000 at 8% to finance inventory-related costs. What is the amount of interest that should be capitalized?
a. $16,000
b. $8,000
c. $800
d. $0
On September 1, Matthew began construction of a custom-designed machine to the specifications of a customer. As of December 31, $200,000 of materials, labor, and overhead have been assigned to the machine. Those costs were incurred evenly throughout the period September 1 through December 31. To finance construction, $230,000 was borrowed at a 9% interest rate. What is the amount of interest that should be capitalized?
a. $18,000
b. $6,000
c. $9,000
d. $3,000
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