Christopher Company borrowed $6 million at 11% on January 1, 2014, to build a new building. The building is expected to take 18 months to complete. Christopher invests the money from the project until it is needed for construction. He is currently earning 10%. The following is the expenditures as they relate to the construction of the building.
January 1 $1,500,000
April 1 $1,850,000
October 1 $1,100,000
December 31 $1,000,000
Required:
1) Compute the amount of interest expense Christopher would capitalize.
2) Compute the amount of interest revenue Christopher would recognize.

Question

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The Answer of Christopher Company borrowed $6 million at 11% on January 1, 2014, to build a new building. The building is expected to take 18 months to complete. Christopher invests the money from the project until it is needed for construction. He is currently earning 10%. The following is the expenditures as they relate to the construction of the building.
January 1 $1,500,000
April 1 $1,850,000
October 1 $1,100,000
December 31 $1,000,000
Required:
1) Compute the amount of interest expense Christopher would capitalize.
2) Compute the amount of interest revenue Christopher would recognize.

Christopher Company Borrowed $6 Million at 11% on January 1