ABC Furniture Company started construction of a office building for it’s own use at an estimated...

ABC Furniture Company started construction of a office building for it’s own use at an estimated cost of $5,000,000 on January 1, 2016. ABC expected to complete the building by December 31, 2016. ABC has the following debt obligations outstanding during the construction period.

Construction Loan 12% interest, payable semiannually, issued December 31, 2015 $2,000,000

Short Term Loan 10% interest, payable monthly, and principal payable at maturity on May 30, 2017 $1,400,000

Longterm loan – 11% interest, payable on January 1 of each year. Principal payable on January 1, 2019 $1,000,000

Assume that they completed the office building on December 31, 2016 as planned and the weighted average of accumulated expenditures was $3,600,000. What is the avoidable interest and the total cost capitalized for this building including interest?

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ekkarill92 answered 1 year ago

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