Question: Kobe Company began constructing a building for its own use in February 2014. During 2014, Kobe incurred interest of $70,000 on specific construction debt and

Kobe Company began constructing a building for its own use in February 2014. During 2014, Kobe incurred interest of $70,000 on specific construction debt and $15,000 on other borrowings. Interest computed on the weighted-average amount of accumulated expenditures for the building during 2014 was $60,000.

Required:
1. What amount of interest should Kobe capitalize? Prepare the journal entry to record payment of the interest.
2. If interest computed on the weighted-average amount of accumulated expenditures for the building during 2014 was instead $90,000, what amount of interest should Kobe capitalize?

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