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Hawkins Corporation Began Construction of a Motel on March 31

Question 121

Essay

Hawkins Corporation began construction of a motel on March 31, 2018. The project was completed on April 31, 2019. No new loans were required to fund construction. Hawkins does have the following two interest-bearing liabilities that were outstanding throughout the construction period:

$ 4,000,000, 6% note
$16,000,000, 10% bonds

Construction expenditures incurred were as follows:

 March 31,2018$4,000,000 June 30, 2018 6,000,000 November 30,2018 1,800,000 February 28, 2019 3,000,000\begin{array}{lr}\text { March } 31,2018 & \$ 4,000,000 \\\text { June 30, 2018 } & 6,000,000 \\\text { November 30,2018 } & 1,800,000 \\\text { February 28, 2019 } & 3,000,000\end{array}

The company's fiscal year-end is December 31.

Required:
Calculate the amount of interest capitalized for 2018 and 2019.

Correct Answer:

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Average accumulated expenditures for 201...

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