Compute avoidable interest for skysong company

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Reference no: EM131977056

Problem

Skysong Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1, 968,000 on March 1, $1 248,000 on June 1, and $3, 046, 400 on December 31. Skysong Company borrowed $1, 085, 800 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2, 448, 100 note payable and an 10%, 4-year, $3, 546, 200 note payable.

Compute avoidable interest for Skysong Company. Use the weighted-average interest rate for interest capitalization purposes.

Reference no: EM131977056

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