Summary of Answer

Answer 1 Interest capitalized in 2021 $          658,000

Answer 1 Interest capitalized in 2022 $          765,690
Answer 2 Total cost of the building $    10,862,690
Answer 3 Interest expense in 2021 $          894,000
Answer 3 Interest expense in 2022 $          786,310

Answer 1

Expenditure for 2021

Expenditure Amount Time factor Weighted Average
01-Jan-21 $         1,940,00012-Dec $      1,940,000
1-Mar-21 $         1,680,00010-Dec $      1,400,000
30-Jun-21 $         1,880,000 6-Dec $          940,000
1-Oct-21 $         1,680,000 3-Dec $          420,000
Accumulated$         7,180,000
Average Accumulated cap $      4,700,000

Interest capitalized in 2021

Average AccMultiplied byInterest capitalized in 20
$             
$                                         
14.00% 4,700,000658,000

Total capital$         7,180,000 $      7,838,000

$              658,000

Expenditure for 2022

Expenditure Amount Time factor Weighted Average
01-Jan-22 $         7,838,000 9-Sep $      7,838,000
31-Jan-22 $             432,000 8-Sep $          384,000
30-Apr-22 $             765,000 5-Sep $          425,000
31-Aug-22 $         1,062,000 1-Sep $          118,000
$      
Accumulated
10,097,000
Average accumulated cap $      8,765,000

Weighted average rate fo

$                                         
6.00% $             
3,000,000 180,000
$                                         
10.00% $             
7,000,000 700,000
$                                      $             
10,000,000 880,000

Weighted aver
$             880,000
$        10,000,000
8.80%

Interest capitalized in 2
For construc$         4,800,000
14.00% $          672,000
Other debt $         3,965,000
8.80% $          348,920
Interest for annual $      1,020,920
Interest capitalized in 20 $          765,690

Answer 2

The total cost of the building

Expenditure in 2021 $      7,180,000
Interest capitalized in 2021 $          658,000
Expenditure in 2022 $      2,259,000
Interest capitalized in 2022 $          765,690
The total cost of the building $    10,862,690

Answer 3

Interest expense charged to income statement

Construction$         4,800,000
14.00% $          672,000
Other debt 1$         3,000,000
6.00% $          180,000
Other debt 2$         7,000,000
10.00% $          700,000
Total interest paid $      1,552,000

Interest expense charged

Year 2021 2022
Total interest paid $          1,552,000
$      1,552,000
Less: interest capitalized$              658,000
$          765,690
Interest expense charged $              894,000
$          786,310