Problem based on report as capitalized interest


Peyton Company started construction of a new office building on January 1, 2011, and moved into the finished building on July 1, 2012. Of the building's $5,000,000 total cost, $4,000,000 was incurred in 2011 evenly throughout the year. Peyton's incremental borrowing rate was 12 percent throughout 2011, and the total amount of interest incurred by Peyton during 2011 was $204,000. What amount should Peyton report as capitalized interest at December 31, 2011?

a. $480,000

b. $300,000

c. $240,000

d. $204,000

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Accounting Basics: Problem based on report as capitalized interest
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