Kobe Company began constructing a building for its own

use
Kobe Company began constructing a building for its own use

Kobe Company began constructing a building for its own use in February 2017. During 2017,
Kobe incurred interest of $70,000 on specific construction debt and $15,000 on other
borrowings. Interest computed on the weighted-average amount of accumulated expenditures
for the building during 2017 was $60,000.
Required:
1. What amount of interest should Kobe capitalize? Prepare the journal entry to record payment
of the interest.
2. If interest computed on the weighted-average amount of accumulated expenditures for the
building during 2017 was instead $90,000, what amount of interest should Kobe capitalize?

Kobe Company began constructing a building for its own use

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