Question

Concord Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,932,000 on March 1, $1,212,000 on June 1, and $3,081,610 on December 31. Compute Concord’s weighted-average accumulated expenditures for interest capitalization purposes.

Answer 1

Answer:

$2,317,000

Explanation:

The computation of the weighted-average accumulated expenditures for interest capitalization purposes is shown below:

For expenditure on March 1

= $1,932,000 × 10 months ÷ 12 months

= $1,610,000

On June 1

= $1,212,000 × 7 months ÷ 12 months

= $707,000

On December 31, it would be zero

So, the accumulated expenditures is

= $1,610,000 + $707,000

= $2,317,000