Question - Prairie Co. is in the process of constructing a new building. The following data pertains to the project:
Year 1- Expenditures
January 1 $700,000
May 1 $900,000
November 1 $400,000
Year 2- Expenditures
March 1- $700,000
September 1- $600,000
The project was completed on September 30.
Outstanding company debt:
Mortgage related to construction; 10% $1,300,000
Bond issued prior to construction; 7% $900,000
Bond issued prior to construction; 6% $800,000.
Required- Determine how much interest would be capitalized in Year 1 and 2.