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In: Accounting

Bruzzone industries decided to construct a new plant and began construction on January 1, 2010 and...

Bruzzone industries decided to construct a new plant and began construction on January 1, 2010 and complete construction on January 1, 2012, Assume bruzzone has a weighted average interest rate on their debt of 14% and that total actually interest paid on all existing debt each December 31 is $700,000. Bruzzone had the following expenditures related to the construction.

January 1, 2010 $2,600,000

July 1, 2010 $1,000,000

April 1, 2011 $800,000

What amount of interest will be capitalized for the year 2010?

a) $112,000

b) $434,000

c)$504,000

d) $588,000

e)616,000

f) $658,000

g) 700,000

Assume the amount of interest capitilized during 2010 was $500,000. What amount of interest will be capitalized for the year 2011?

a) $112,000

b) $434,000

c)$504,000

d) $588,000

e)616,000

f) $658,000

g) 700,000

Expert Solution

ekkarill92 answered 2 years ago

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