Answer:
Interest capitalized for 2017 = $86,805
Explanation:
As per the data given in the question,
Average expenditure for 2016 = ($200,000×12÷12) +($300,000×4÷12)+($300,000×0÷12)
=$300,000
Interest capitalized for 2016 =($200,000×12÷12)+($300,000×4÷12)+($300,000×0÷12)×12%
= $36,000
Average expenditure for 2017 :
Accumulated expenditure in 2016 = ($200,000+$300,000+$300,000 +$36,000)×9÷9
= $836,000
For March-31,2017 = $300,000×6÷9
= $200,000
For Sept-30,2017 = $200,000×0÷9 = $0
Average expenditure for 2017 = $836,000 + $200,000 + $0
= $1,036,000
Interest capitalized for 2017 :
Specific borrowing = $750,000×9÷12×12%
= $67,500
Excessive amount = ($1,036,000 - $750,000)×9÷12×9%
= $19,305
Interest capitalized for 2017 = $67,500 + $19,305
= $86,805
