Interest During Construction

Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:

Capitalization period: January 1, 2019, to June 30, 2020

Expenditures on project:

2019:
	January 1	$ 420,000
	May 1	513,000
	October 1	552,000
2020:
	March 1	1,560,000
	June 30	516,000

Amounts borrowed and outstanding: $1.5 million borrowed at 12%, specifically for the project $6 million borrowed on July 1, 2018, at 14% $10 million borrowed on January 1, 2017, at 8%

Required:

Note: Round all final numeric answers to two decimal places.

Compute the amount of interest costs capitalized each year.

Capitalized interest, 2019	?
Capitalized interest, 2020	?

If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020.

[ $ fill in the blank ??? ]

Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report

[ higher, lower, or the same amount of ]

income than if it had not capitalized interest. In future periods, the same company will report

[higher, lower, or the same amount of ]

income than if it had not capitalized interest.