Clay Company started construction on a new office building on
Clay Company started construction on a new office building on January 1, 2014, and it moved into the finished building on July 1, 2015. Of the building’s $2,500,000 total cost, $2,000,000 was incurred in 2014 evenly throughout the year. Clay’s incremental borrowing rate was 12% throughout 2014, and the total amount of interest incurred by Clay during 2014 was $102,000.

Required:
What amount should Clay report as capitalized interest at December 31, 2014?

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