Question :
1. On 1st July, 2012, the Crocus Company started construction of a new manufacturing plant. The plant was completed on 31st October, 2013. Expenditures on the project were as given ($ in millions):
July 1, 2012 54
October 1,2012 22
February 1, 2013 30
April 1, 2013 21
September 1, 2013 20
October 1, 2013 6
On 1st July, 2012, Crocus obtained a $70 million construction loan with a 6% interest rate. The loan was outstanding throughout the end of October, 2013. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8 percent. This note was outstanding through all of 2012 and 2013. The company's fiscal year-end is December 31.
2. Evaluate the amount of interest that Crocus should capitalize in 2012, using the particular interest method?
$1.90 million.
$1.95 million.
$2.96 million.
None of the above is correct.
3. In evaluating the capitalized interest for 2013, Crocus' average accumulated expenditures are:
$46.30 million.
$103.54 million.
$122.30 million.
$124.25 million.
4. What is the amount of interest that Crocus could capitalize in 2013, using the particular interest method (rounded to the nearest thousand dollars)?
$7,248,000 (rounded).
$7,283,000 (rounded).
$8,740,000 (rounded).
None of the above is correct.