Interest Capitalized Calculation for Construction Project

How was the interest capitalized for the construction project calculated in 2024?

Calculation of Interest Capitalized for 2024

The interest capitalized for 2024 was approximately $299,294. To calculate this amount, the specific interest method was used. This method involves determining the weighted-average accumulated expenditures during the construction period. Here's how the calculation was done step by step: 1. Determine the Time Periods for Each Expenditure: - January 1, 2024: 12 months - September 1, 2024: 4 months - December 31, 2024: 3 months - March 31, 2025: 6 months - September 30, 2025: 9 months 2. Calculate the Total Number of Months in the Construction Period: 12 months + 4 months + 3 months + 6 months + 9 months = 34 months 3. Calculate the Weighted-Average Accumulated Expenditures: - (270,000 * 12) + (384,000 * 4) + (384,000 * 3) + (384,000 * 6) + (270,000 * 9) = 10,620,000 4. Calculate the Interest Capitalized for 2024: Interest Capitalized = Weighted-average accumulated expenditures * Interest rate * Time period Interest Capitalized = 10,620,000 * 0.08 * (12/34) Interest Capitalized = $299,294.12 (rounded to the nearest dollar) Therefore, the interest capitalized for the construction project in 2024 was approximately $299,294.

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