On January 3, 2010, Mercury Company began self-constructing an asset that qualified for interest capitalization. On January 5, Mercury borrowed $300,000 on an 8% construction loan. In addition, Mercury had $400,000 of 6% notes payable and $700,000 of 9% bonds payable outstanding. By December 31, expenditures (occurring evenly throughout the year) of $800,000 had been made on the asset. Investment of unused funds during the year yielded $1,200 of interest revenue.

Required:

Compute the amount of interest that should be capitalized during 2010.

Answer rating: 100% (QA)

31910 computed as follows ... View the full answer