Peyton Company Started Construction of a New Office Building on January

question 31

Multiple Choice

Peyton Company started construction of a new office building on January 1, 2011, and moved into the finished building on July 1, 2012. Of the building's $5,000,000 total cost, $4,000,000 was incurred in 2011 evenly throughout the year. Peyton's incremental borrowing rate was 12 percent throughout 2011, and the total amount of interest incurred by Peyton during 2011 was $204,000. What amount should Peyton report as capitalized interest at December 31, 2011?

• A) $480,000
• B) $300,000
• C) $240,000
• D) $204,000

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Definitions:

Subsidization

Financial assistance granted by the government or an organization to support an economic sector, business, or consumer, making the goods or services more affordable.

Capitalist States

Countries where economic systems are based on private ownership and the free market determines allocation of resources.

Authoritarian States

Nations where political power is concentrated in a single authority, with limited personal freedoms.

Individual Wealth

The total value of all assets owned by a single person, minus any debts.