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Alta Company is constructing a production complex that qualifies for interest capitalization The following information is available Capitalization

Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:

  • Capitalization period: January 1, 2013, to June 30, 2014
  • Expenditures on project:
  • Amounts borrowed and outstanding:
    $1.5 million borrowed at 12%, specifically for the project
    $6 million borrowed on July 1, 2012, at 14%
    $14 million borrowed on January 1, 2008, at 8%

Required:

  1. Compute the amount of interest costs capitalized each year.
    Capitalized interest, 2013 $
    Capitalized interest, 2014 $
  2. If it is assumed that the production complex has an estimated life of 20 years and a residual value of zero, compute the straight-line depreciation in 2014.

May 21 2020 View more View Less

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