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question 94

Multiple Choice

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:

License Plates

License Plates are metal or plastic plates attached to motor vehicles for official identification purposes, displaying a unique number or alphanumeric code issued by governmental agencies.

Moving Expenses

Costs associated with relocating from one residence to another, which may include packing, transportation, and temporary housing fees.

Speed Limits

Regulations set by authorities that specify the maximum speed at which vehicles may legally travel on a particular stretch of road.

Exponentially Depreciates

Refers to assets that lose value at a rate which accelerates over time, based on a specific formula.