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Discuss what should wells report as capitalized interest

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On January 1, 2015, Wells Tech signed a $950,000 two-year construction contract. Wells secured $950,000 financing at 7%. In 2015, Wells paid out $650,000. Excess borrowed funds were invested, yielding $120,000 income. What should Wells report as capitalized interest at December 31, 2015?

A : $ 75,000
B : $ 120,000
C : $ 26,250
D : $ 45,500

Reference no: EM131758549

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