On January 1, 2021, the Marjlee Company began construction of an office building to be used as
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Question:
On January 1, 2021, the Marjlee Company began construction of an office building to be used as its corporate headquarters. The building was completed early in 2022. Construction expenditures for 2021, which were incurred evenly throughout the year, totaled $7,200,000. Marjlee had the following debt obligations which were outstanding during all of 2021:
| Construction loan, 10% | $ | 1,800,000 | |
| Long-term note, 9% | 2,400,000 | ||
| Long-term note, 6% | 4,800,000 | ||
Required:
Calculate the amount of interest capitalized in 2021 for the building using the specific interest method.
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