Question 1 - Cole Co. began constructing a building for its own use in January 2011. During 2011, Cole incurred interest of $50,000 on specific construction debt, and $20,000 on other borrowings. Interest computed on the weighted-average amount of accumulated expenditures for the building during 2011 was $40,000. What amount of interest should Cole capitalize?
a. $20,000
b. $40,000
c. $50,000
d. $70,000
Question 2 - During the current year, Orr Company incurred the following costs:
Research and development services performed by Key Corp. for Orr $150,000
Design, construction, and testing of preproduction prototypes and models 200,000
Testing in search for new products or process alternatives 175,000
In its income statement for the current year, what amount should Orr report as research and development expense?
a. $150,000
b. $200,000
c. $350,000
d. $525,000