Clarion Realty Clarion Realty Has Decided to Construct Its Own

question 135

Multiple Choice

Clarion Realty Clarion Realty has decided to construct its own office building.The construction will be partially financed through a construction loan and any remainder will be financed from internally generated funds.The internal accountants have collected the following information concerning the construction.
$\begin{array}{llll}& \text { Average Balance } & \text { Construction } & \text { Other } \\\text { Year } & \text { Construction Account } & \text { Debt } @ 6 \% & \text { Debt@ } 10 \%\\1 & \$ 2,000,000 & \$ 1,000,000 & \$ 500,000 \\2 & \$ 4,000,000 & \$ 1,000,000 & \$ 250,000 \\3 & \$ 3,000.000 & \$ 800.000 & \$ 200.000\end{array}$ The amount, if any, of capitalized interest cost for Year 1 is

• A)$0
• B)$50,000
• C)$60,000
• D)$110,000
• E)$170,000

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Definitions:

Trainees

Individuals who are undergoing training in a particular skill or profession.

Cowardly

Showing a lack of courage or bravery; easily scared to face danger, pain, or adversity.

Panic

An intense, sudden feeling of fear or anxiety that can cause physical symptoms and irrational behavior.

Stress

A factor that can be physical, mental, or emotional, leading to stress in the body or mind and potentially contributing to the onset of illnesses.