On January 1, 2025, Swifty, Inc. signed a fixed price contract to have Builder Associates construct a major plant facility at a cost of $4,471,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2025, to finance the construction cost, Swifty borrowed $4,471,000 payable in 10 annual installments of $447, 100, plus interest at the rate of 10%. During 2025, Swifty made deposits and progress payments totaling $1,676, 625 under the contract; the weighted - average amount of accumulated expenditures was $894, 200 for the year. The excess borrowed funds were invested in short-term securities, from which Swifty realized investment income of $265,300. What amount should Swifty report as capitalized interest at December 31, 2025?

On January 1, 2025, Swifty, Inc. signed a fixed price contract to have Builder Associates construct a major plant facility at a cost of $4,471,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2025, to finance the construction cost, Swifty borrowed $4,471,000 payable in 10 annual installments of $447, 100, plus interest at the rate of 10%. During 2025, Swifty made deposits and progress payments totaling $1,676, 625 under the contract; the weighted - average amount of accumulated expenditures was $894, 200 for the year. The excess borrowed funds were invested in short-term securities, from which Swifty realized investment income of $265,300. What amount should Swifty report as capitalized interest at December 31, 2025?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 18PC

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