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Q: Arlington Company is constructing a building in 2015. Construction began on January 1 and was completed on December 31. Expenditures were $4,800,000 on March 1, $3,960,000 on June 1, and $6,000,000 on December 31. Arlington Company borrowed $2,400,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year, $4,800,000 note payable and an 11 %, 4-year, $9,000,000 note payable.

6. what is the weighted average use for interest capitalization purposes?

a.11%

b. 10.85%

c. 10.5%

d. 10.65%

7. what is the avoidable interest for Arlington Company?

a. $288000

b. $927615

c. $328562

d. $704415

8. what is the amount of interest capitalized for Arlington?

a $288000

b. $927615

c. $328562

d. $704415

9. How much is the interest expense for Arlington as of December 31 of the year?

a. $288000

b. $1053585

c. $328562

d. $704415

10. On its balance sheet, how much is the cost of building?

a. $704415

b.$6310000

c. $14760000

d. $15464415

11. Arlington Company uses the straight-line method for depreciation. The building will be depreciation for 30 years, with no salvage value. How much will the depreciation for the above building each year?

a. $704415

b. $288000

c. $704415

d. $515480.5

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