Tangent Company is constructing a production complex that qualifies for interest capitalization. The following information...
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Accounting
Tangent Company is constructing a production complex that qualifies for interest capitalization. The following information is available:
Capitalization period: January 1, 2016, to June 30, 2017
Expenditures on project:
| 2016: | ||
| January 1 | $ 648,000 | |
| May 1 | 369,000 | |
| October 1 | 600,000 | |
| 2017: | ||
| March 1 | 1,392,000 | |
| June 30 | 588,000 |
Amounts borrowed and outstanding: $1.5 million borrowed at 10%, specifically for the project $8 million borrowed on July 1, 2015, at 12% $18 million borrowed on January 1, 2011, at 6%
Required:
Note: Round all final numeric answers to the nearest dollar.
Compute the amount of interest costs capitalized each year.
| Capitalized interest, 2016 | $ |
| Capitalized interest, 2017 | $ |
If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2017.
$
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