Question - Tuna Company is building a new office and conference center for $33,000,000. Payments were made to the contractor as follows:
Jan 1, 2015 $ 6,000,000 for land
July 1, 2015 $10,000,000
Sep 30, 2015 $ 10,000,000
Dec 31, 2015 $ 7,000,000
To finance their construction, Tuna borrowed a construction loan of $9,000,000 on January 1, 2015 at 9% per year. Tuna has two other long term debts for the entire year of 2015:
Loan A $ 5,000,000 11%
Loan B $15,000,000 6%
Determine the construction interest to be capitalized and the interest to be expensed for 2015.