Place Company started construction of a new office building on January 1,2014,and moved into the finished building on July 1,2015.Of the building's $5,000,000 total cost,$4,000,000 was incurred in 2014 evenly throughout the year.Place's incremental borrowing rate was 12 percent throughout 2014,and the total amount of interest incurred by Place during 2014 was $204,000.What amount should Place report as capitalized interest at December 31,2014?
A) $480,000
B) $300,000
C) $240,000
D) $204,000

Question

Quizplus · Accepted Answer

The correct amount of capitalized interest is the actual interest incurred during the period, which is $204,000. Since the question specifies that Place incurred $204,000 in interest during 2014, this is the amount that should be capitalized.

Place Company Started Construction of a New Office Building on January