Fulsom Co. began construction of a new factory at the beginning of 2015. At the end of the year, construction was completed, and construction costs totaled $200,000. Fulsom borrowed $180,000 at the beginning of 2015 to finance the construction and repaid the loan at the end of 2015. The interest rate on the loan was 9%. Determine the following amounts.
A. The actual interest incurred on the construction loan during 2015.
B. The interest to be capitalized for 2015.
C. The total cost of the factory reported on the balance sheet.
D. What impact does capitalizing interest have on net income for 2015? Explain.

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The Answer of Fulsom Co. began construction of a new factory at the beginning of 2015. At the end of the year, construction was completed, and construction costs totaled $200,000. Fulsom borrowed $180,000 at the beginning of 2015 to finance the construction and repaid the loan at the end of 2015. The interest rate on the loan was 9%. Determine the following amounts.
A. The actual interest incurred on the construction loan during 2015.
B. The interest to be capitalized for 2015.
C. The total cost of the factory reported on the balance sheet.
D. What impact does capitalizing interest have on net income for 2015? Explain.

Fulsom Co Began Construction of a New Factory at the Beginning