In early February 2020, Huey Corp. began construction of an addition to its head office building that is expected to take 18 months to complete. The following 2020 expenditures relate to the addition:

On February 1, Huey issued a $100,000, three-year note payable at a rate of 12% to finance most of the initial payment to the contractor. No other asset-specific debt was entered into. Details of other interestbearing debt during the period are provided in the table below:

Other Debt Instruments Outstanding?2020 ....................................... Principal Amount9%, 15-year bonds, issued May 1, 2005, matured May 1, 2020 ........................ $300,0007%, 10-year bonds, issued June 15, 2014 ............................................................. $500,0006%, 12-year bonds, issued May 1, 2020 ............................................................... $300,000

Instructions

What amount of interest should be capitalized for the fiscal year ended December 31, 2020, according to IAS 23?

Transcribed Image Text:

Payment #1 to contractor Mar. 1 Feb. 1 $120,000 24,000 60,000 Payment to architect July 1 Payment #2 to contractor Dec. 1 Payment #3 to contractor Dec. 31 180,000 Asset carrying amount $384,000