Question

Sheridan Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,004,000 on March 1, $1,284,000 on June 1, and $3,039,450 on December 31. Compute Sheridan’s weighted-average accumulated expenditures for interest capitalization purposes.

Answer 1

Sheridan's weighted average accumulated expenditure for Interest capitalization purpose is $24,19,000.

Calculation:

Expenditure Date	Amount Paid (A)	Capitalization Period (No. of months from expenditure date to Dec 31 of the year) (B)	Weight C = B/12	Weighted Expenditure D = A X C
Formula	No. of Months	Formula	Amount
Mar-01	20,04,000.00	Dec 31 - Mar 01	10	(10 / 12)	0.83	16,70,000.00
Jun-01	12,84,000.00	Dec 31 - June 01	7	(7 / 12)	0.58	7,49,000.00
Dec-31	30,39,450.00	Dec 31 - Dec 31	-	(0 / 12)	-	-
		Total weighted average accumulated expenditure	24,19,000.00