Question

On June 1, 2020, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2021. Expenditures on the project were as follows ($ in millions):

July 1, 2020	72
October 1, 2020	40
February 1, 2021	48
April 1, 2021	30
September 1, 2021	29
October 1, 2021	15

On July 1, 2020, Crocus obtained a $88 million construction loan with a 10% interest rate. The loan was outstanding through the end of October, 2021. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 12%. This note was outstanding during all of 2020 and 2021. The company's fiscal year-end is December 31.

In computing the capitalized interest for 2021, Crocus' average accumulated expenditures are:

Answer 1

Date	Expenditures ( in millions)	Proportion	Average Accumulated Expenditures
July 1 ,2020	$ 72	6 / 6	$ 72
October 1, 2020	$ 40	3 / 6	$ 20
		Total	$ 92
Total interest For 2020 =	$ 92 milion x 10% x 6 /12 =	$ 4.6 million
Date	Expenditures ( in millions)	Proportion	Average Accumulated Expenditures
January 1, 2021	$ 116.60 ( $ 72 + $ 40 + $ 4.6)	10 / 10	$ 116.60
February 1, 2021	$ 48	9 / 10	$ 43.20
April 1, 2021	$ 30	7 / 10	$ 21
September 1, 2021	$ 29	2 / 10	$ 5.80
October 1, 2021	$ 15	1 / 10	$ 1.50
		Average Accumulated Expenditures for 2021	$ 188.10