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During 2018, Barden Building Company constructed various assets at a total cost of $12,600,000. The...

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Accounting

During 2018, Barden Building Company constructed various assets at a total cost of $12,600,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2018 were $9,500,000. The company had the following debt outstanding at December 31, 2018:

1. 10%, 5-year note to finance construction of various assets,

dated January 1, 2018, with interest payable annually on January 1 $7,200,000

2. 12%, ten-year bonds issued at par on December 31, 2012, with interest

payable annually on December 31 6,000,000

3. 9%, 3-year note payable, dated January 1, 2017, with interest payable

annually on January 1 3,000,000

Instructions

Compute the amounts of each of the following (show computations).

1. Avoidable interest.

2. Total interest to be capitalized during 2018.

image

Weighted Average Accumulated Expenditures Interest Rate Avoidable interest computation: Avoidable Interest 1 1 2 3 3 4 5 6 5 O 0000AWN o coNOWN 6 7 8 9 10 7 8 9 10 11 12 13 14 15 16 0 0 11 121 13 141 151 161 17 18 191 201 21 221 23 241 251 17 18 19 20 ||21 22 23 24 25

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