On January 1, 2021, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2022. Construction expenditures for 2021, which were incurred evenly throughout the year, totaled $6,000,000. Marjlee had the following debt obligations which were outstanding during all of 2021: Construction loan, 10% $ 1,500,000Long-term note, 9% 2,000,000Long-term note, 6% 4,000,000 Required:Calculate the amount of interest capitalized in 2021 for the building using the specific interest method.
On January 1, 2021, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2022. Construction expenditures for 2021, which were incurred evenly throughout the year, totaled $6,000,000. Marjlee had the following debt obligations which were outstanding during all of 2021: Construction loan, 10% $ 1,500,000Long-term note, 9% 2,000,000Long-term note, 6% 4,000,000 Required:Calculate the amount of interest capitalized in 2021 for the building using the specific interest method.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 9MC
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On January 1, 2021, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2022. Construction expenditures for 2021, which were incurred evenly throughout the year, totaled $6,000,000. Marjlee had the following debt obligations which were outstanding during all of 2021:
Construction loan, 10% $ 1,500,000
Long-term note, 9% 2,000,000
Long-term note, 6% 4,000,000
Required:
Calculate the amount of interest capitalized in 2021 for the building using the specific interest method.
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