Fulsom Co.began construction of a new factory at the beginning of 2017.At the end of the year,construction was completed,and construction costs totaled $200,000.Fulsom borrowed $180,000 at the beginning of 2017 to finance the construction and repaid the loan at the end of 2017.The interest rate on the loan was 9%.Determine the following amounts.
A. The actual interest incurred on the construction loan during 2017 .

B. The interest to be capitalized for 2017 .

C. The total cost of the factory reported on the balance sheet.

D. What impact does capitalizing interest have on net income for 2017? Explain.

Question

Fulsom Co.began construction of a new factory at the beginning of 2017.At the end of the year,construction was completed,and construction costs totaled $200,000.Fulsom borrowed $180,000 at the beginning of 2017 to finance the construction and repaid the loan at the end of 2017.The interest rate on the loan was 9%.Determine the following amounts.
 A. The actual interest incurred on the construction loan during 2017 .

B. The interest to be capitalized for 2017 .

C. The total cost of the factory reported on the balance sheet.

D. What impact does capitalizing interest have on net income for 2017? Explain.

Quizplus · Accepted Answer

The Answer of Fulsom Co.began construction of a new factory at the beginning of 2017.At the end of the year,construction was completed,and construction costs totaled $200,000.Fulsom borrowed $180,000 at the beginning of 2017 to finance the construction and repaid the loan at the end of 2017.The interest rate on the loan was 9%.Determine the following amounts.
 A. The actual interest incurred on the construction loan during 2017 .

B. The interest to be capitalized for 2017 .

C. The total cost of the factory reported on the balance sheet.

D. What impact does capitalizing interest have on net income for 2017? Explain.

Fulsom Cobegan Construction of a New Factory at the Beginning of of 2017.At