In 2017, Trout Corporation constructed assets which cost $1,000,000. The weighte
ID: 2408191 • Letter: I
Question
In 2017, Trout Corporation constructed assets which cost $1,000,000. The weighted-average accumulated expenditures on these assets during 2017 was $600,000. To help pay for construction, Trout Corporation borrowed $440,000 at 10% on January 1, 2017. Funds not necessary for construction were invested in short-term securities, yielding $9,000 in interest revenue. In addition to construction funds borrowed, 2017’s outstanding debt included a $500,000, 10-year, 9% note payable dated January 1, 2011. How much interest should Trout Corporation capitalize in 2017? a $60,000 b $30,000 c $58,400 d $94,400
Explanation / Answer
c $58,400
Interest Rate Total accumulated expenditure $600,000 Borrowed $440,000 10% $44,000 Balance $160,000 9% $14,400 $58,400