Share
Explore BrainMass

Interest that should be capitalized

Nguyen Corp constructed assets costing $600 000. The Weighted average accumulated expenditures on these assets during the year was $400 000. To help pay for construction, $320 000 was borrowed at 10% at the beginning of year. Some funds were not needed for construction so thus were temporarily invested in short term securities which resulted in $4500 interest revenue. Other than the construction funds borrowed, the only other debt outstanding for the year was a $250 000, 10 year, 9% note payable dated January 1991.

What is the amount of interest that should be capitalized by Nguyen Corp during the year of 2005?

Solution Preview

Nguyen Corp constructed assets costing $600 000. The Weighted average accumulated expenditures on these assets during the year was $400 000. To help pay for construction, $320 000 was borrowed at 10% at the beginning of year. Some funds were not needed for construction so thus were ...

Solution Summary

The solution explains how to determine the amount of interest that should be capitalized

$2.19