Dubai Company is constructing a building. Construction began on January 1, 2018

ID: 2404527 • Letter: D

Question

Dubai Company is constructing a building. Construction began on January 1, 2018 and was completed on December 31. Expenditures were

January 1,2018 - $300,000

April 1 - $450,000

September 1 - $300,000

December 31 - $450,000

Dubai company had $5000,000; 12% in note payable.

a. What are the weighted-average accumlated expenditures?

b. What is the weighted-average interest rate used for interest capitalization purposes?

c. What is the avoidable interest for Dubai Company?

d. What amount of interest should be charged to expense?

e. What is the total cost of the project for Dubai company?

Ans

a)Jan.1 - $300,000×12/12=$300,000

April 1-$450,000×9/12=$337,000

September 1-$300,000×4/12=100,000

Dec.31-$450,000×0/12=0

Weighted-average Accumulated Expenditures are=$(300,000+337,000+100,000+0)=$7,37,500

For answering b,c , d and e

Question is incomplete

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