Question

Sandhill Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,884,000 on March 1, $1,284,000 on June 1, and $3,082,450 on December 31. Compute Sandhill’s weighted-average accumulated expenditures for interest capitalization purposes.

Answer 1

Answer:

$2,319,000

Explanation:

Amount

March1 $1,884,000

June 1 $1,284,000

Dec 31 $3,082,450

Capitalization period

March1

10/12×$1,884,000 =$1,570,000

June 1

7/12 $1,284,000=$749,000

Dec 31

0

Weighted Average Accumulated expenditure

March 1 $1,570,000

June1 $749,000

Dec 31 $0

Total $2,319,000