1. Cooper, Inc., is constructing a building that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2013-December 31, 2014 Expenditures on project (incurred evenly): 2013 $30,000 2014 $50,000 Amounts borrowed and outstanding (all debt incurred January 1, 2013) $10,000 at 10% (specifically for the construction project) $18,000 at 11% (general debt) $30,000 at 13% (general debt) Required:

a. Compute the amount of interest that should be capitalized in 2013 and 2014. (Round interest rates to the nearest hundredths, e.g., 07.62%.)

b. Assume that in 2013 unused borrowed funds were invested and earned interest revenue amounting to $800. How much interest now should be capitalized to the asset account in 2013?

2. Roberts Company is making significant improvements to some of its assets, as follows.

1. It is replacing the old furnace that cost $40,000 and has a $15,000 book value with a new furnace/air conditioner combination. Roberts spent $50,000 in cash and was given a $4,000 trade-in on the old furnace.

2. The delivery van is being updated with a new $8,000 engine that will increase the useful life of the van by 2 years. The van originally cost $36,000 and has accumulated depreciation of $26,000.