The Kit Company borrows $5 million at 12% on January 1, 2007 specifically for the purpose of
Question:
The Kit Company borrows $5 million at 12% on January 1, 2007 specifically for the purpose of financing a construction project. The company invests the total amount at 11% until it makes payments for the construction project. During the first year of construction, the company incurs construction costs of $4 million evenly over the year.
Required
Compute the amount of interest that the company would capitalize and the amount of interest revenue it would recognize.
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Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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