Capitalization of interest In February 2024, Quorum Corp. began the construction of a 10-storey building. The construction
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Question:
- Capitalization of interest
In February 2024, Quorum Corp. began the construction of a 10-storey building. The construction is expected to be completed by January 2025.
During 2024, the following payments were made: Apr. 1: $1,000,000
Jun. 1: $1,500,000
Aug. 1: $900,000
Oct. 1: $950,000
No asset specific debt was incurred.
During 2024, Quorum's general debt consisted of the following:
$2 million, 5%, 2-year note,
$1.2 million, 4.5%, 2-year note,
$0.75 million, 3%, 5-year note.
Instructions
- Calculate the weighted-average accumulated expenditures for the year ended December 31, 2024.
- Calculate the weighted-average capitalization rate on Quorum's general-purpose debt for the year ended December 31, 2024.
- Calculate the avoidable borrowing costs.
- Calculate the amount of Quorum's borrowing costs that should be capitalized.
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