Earlier this year, Cann Co. broke ground on a new $2 million expansion to its plant. Total construction expenses incurred during the year were $200,000 on January 2, $600,000 on May 1, and $300,000 on December 1. On January 2, the company took out a $500,000 construction loan at 12%. The only other outstanding debt the company had was a long-term mortgage with a 10% interest rate of $800,000, which had been outstanding all year. 

How much interest must Cann capitalize as part of the cost of the plant addition?

Answer rating: 100% (QA)

Under US GAAP interest incurred during the construction period must be capitalized as part of the co... View the full answer