An engineering firm has decided to construct its own office building.The construction will be partially financed through a construction loan and any remainder will be financed from internally generated funds.The internal accountants have collected the following information concerning the construction.
$\begin{array}{llll}
& \text { Average Balance } & \text { Construction } & \text { Other } \
\text { Year } & \text { Construction Account } & \text { Debt } @ 10 \% & \text { Debt } @12 \%\
1 & \$ 1,000,000 & \$ 1,000,000 & \$ 500,000 \
2 & \$ 1,500,000 & \$ 1,000,000 & \$ 250,000 \
3 & \$ 2,000,000 & \$ 800,000 & \$ 200,000
\end{array}$ Required:
Determine the amount, if any, of capitalized interest cost for each year.
a. Year 1
b. Year 2
c. Year 3

Question

An engineering firm has decided to construct its own office building.The construction will be partially financed through a construction loan and any remainder will be financed from internally generated funds.The internal accountants have collected the following information concerning the construction.
 $\begin{array}{llll}
& \text { Average Balance } & \text { Construction } & \text { Other } \
\text { Year } & \text { Construction Account } & \text { Debt } @ 10 \% & \text { Debt } @12 \%\
1 & \$ 1,000,000 & \$ 1,000,000 & \$ 500,000 \
2 & \$ 1,500,000 & \$ 1,000,000 & \$ 250,000 \
3 & \$ 2,000,000 & \$ 800,000 & \$ 200,000
\end{array}$ Required:
Determine the amount, if any, of capitalized interest cost for each year.
 a.	Year 1
b.	Year 2
c.	Year 3

Quizplus · Accepted Answer

The Answer of An engineering firm has decided to construct its own office building.The construction will be partially financed through a construction loan and any remainder will be financed from internally generated funds.The internal accountants have collected the following information concerning the construction.
 $\begin{array}{llll}
& \text { Average Balance } & \text { Construction } & \text { Other } \
\text { Year } & \text { Construction Account } & \text { Debt } @ 10 \% & \text { Debt } @12 \%\
1 & \$ 1,000,000 & \$ 1,000,000 & \$ 500,000 \
2 & \$ 1,500,000 & \$ 1,000,000 & \$ 250,000 \
3 & \$ 2,000,000 & \$ 800,000 & \$ 200,000
\end{array}$ Required:
Determine the amount, if any, of capitalized interest cost for each year.
 a.	Year 1
b.	Year 2
c.	Year 3

An Engineering Firm Has Decided to Construct Its Own Office