On January 1, 2016, Olvert Corp. signed a contract to have Bob's Builders construct a distribution center at a cost of $10,000,000. It was estimated that it would take two years to complete the project. Also on January 1, 2017, to finance the construction cost, Tolvin borrowed $10,000,000 payable in five annual installments of $4,000,000 plus interest at the rate of 6%. During 2017, Tolvin made the following construction-related expenditures:

What amount should Tolvin report as capitalized interest at December 31, 2017?

Question

On January 1, 2016, Olvert Corp. signed a contract to have Bob's Builders construct a distribution center at a cost of $10,000,000. It was estimated that it would take two years to complete the project. Also on January 1, 2017, to finance the construction cost, Tolvin borrowed $10,000,000 payable in five annual installments of $4,000,000 plus interest at the rate of 6%. During 2017, Tolvin made the following construction-related expenditures:
  
What amount should Tolvin report as capitalized interest at December 31, 2017?

Quizplus · Accepted Answer

The Answer of On January 1, 2016, Olvert Corp. signed a contract to have Bob's Builders construct a distribution center at a cost of $10,000,000. It was estimated that it would take two years to complete the project. Also on January 1, 2017, to finance the construction cost, Tolvin borrowed $10,000,000 payable in five annual installments of $4,000,000 plus interest at the rate of 6%. During 2017, Tolvin made the following construction-related expenditures:
  
What amount should Tolvin report as capitalized interest at December 31, 2017?