[bean counter]

Reviewing the difficult questions released by the AICPA for 2016 and wondering if someone can help me out with this question?

6. A company with a June 30 fiscal year end entered into a $3,000,000 construction project on April 1 to be completed on September 30. The cumulative construction-in-progress balances at April 30, May 31, and June 30 were $500,000, $800,000, and $1,500,000, respectively. The interest rate on company debt used to finance the construction project was 5% from April 1 through June 30 and 6% from July 1 through September 30. Assuming that the asset is placed into service on October 1, what amount of interest should be capitalized to the project on June 30?

$11,666
$18,750
$75,000
$90,000

BEC - 84 *
AUD - 73, 76 *
REG - 70, 72
FAR - 09/08/16

[atabiaka]

Hi Bean Counter,
Here are my calculations:
$500,000*.05*3/12=$6,250
$300,000*.05*2/12=$2,500
$700,000*.05*1/12=$2,916.66

Total: $11,666.66

[Author]

Replies