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  3. a building was constructed last year for agro co.

A building was constructed last year for Agro Co. for use as a production facility....

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Accounting

  1. 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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