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question 94

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Use the following information to answer questions
Arlington Company is constructing a building.Construction began on January 1 and was completed on December 31.Expenditures were $2,400,000 on March 1, $1,980,000 on June 1, and $3,000,000 on December 31.Arlington Company borrowed $1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building.In addition, the company had outstanding all year a 10%, 3-year, $2,400,000 note payable and an 11%, 4-year, $4,500,000 note payable.
-6.During 2011, Bella Corporation constructed assets costing CHF4,215,000.The weighted-average accumulated expenditures on these assets during 2011 was CHF3,900,000.Bella borrowed CHF2,000,000 at 7.5% on January 1, 2011.Funds not needed for construction were temporarily invested in short-term securities, and earned CHF59,000 in interest revenue.In addition to the construction loan, Bella had two other notes outstanding during the year: (1) a CHF1,500,000, 10-year, 10% note payable dated October 1, 2009, and (2) a CHF1,000,000, 8% note payable dated November 2, 2010.What is the amount of interest that should be capitalized by Bella during 2011?

Definitions:

Hammers

Hammers are hand tools with a weighted head fixed to a long handle, used for delivering an impact to an object.

FIFO Method

"First In, First Out" inventory management system where the goods purchased or produced first are sold or used first.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Hammers

Tools consisting of a weighted "head" fixed to a long handle, used for driving nails into, or pulling them out of, a surface.