Question

Coronado Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,836,000 on March 1, $1,236,000 on June 1, and $3,058,160 on December 31. Compute Coronado’s weighted-average accumulated expenditures for interest capitalization purposes.

Answer 1

$2,251,000

Step-by-step explanation:

According to the scenario, computation of the given data are as follow:-

We can calculate the Weighted Average Accumulated Expenditure by using following formula:-

Weighted Average Accumulated Expenditure = Expenditure × capitalization period

1 March to 31 December = 10 months

1 March = $1,836,000 × 10÷12 = $1,530,000

1 June to 31 December = 7 months

1 June = $1,236,000 × 7÷12 = $721,000

31 Dec. to 31 Dec. = 0 months

31 Dec. = $3,058,160 × 0 = 0

So, Total weighted-average accumulated expenditures = $1,530,000 + $721,000 + 0

= $2,251,000