Brief Exercise 10-14 (Static) Interest capitalization [LO10-7] A company constructs a building for its own use Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $500,000, March 31, $600,000, June 30, $100,000October 30, $600,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $700,000. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively. Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (l.e. 0.1234 should be entered as 12.34%).) Date January 1 March 31 June 30 October 30 Accumulated expenditures Expandito $ 500.000 600,000 400.000 x 600,000 $ 2,100,000 12/12 9/12 = 6/12 2/12 - $ 500,000 450,000 200,000 100,000 5 1.250,000 Amount Interest Rate Capitalized Interest Average accumulated expenditures Construction loan 1,250,000 700000 5 0 % % 0 0 $