Question Details

Dobbs Corporation engaged Kiner, Inc. to design 



Pr. 1—Capitalization of interest.
Early in 2010, Dobbs Corporation engaged Kiner, Inc. to design and construct a complete modernization of Dobbs's manufacturing facility. Construction was begun on June 1, 2010 and was completed on December 31, 2010. Dobbs made the following payments to Kiner, Inc. during 2010:
Date		  Payment	
June 1, 2010	$3,600,000
August 31, 2010	5,400,000
December 31, 2010	4,500,000
In order to help finance the construction, Dobbs issued the following during 2010:
1.	$3,000,000 of 10-year, 9% bonds payable, issued at par on May 31, 2010, with interest payable annually on May 31.
2.	1,000,000 shares of no-par common stock, issued at $10 per share on October 1, 2010.
In addition to the 9% bonds payable, the only debt outstanding during 2010 was a $750,000, 12% note payable dated January 1, 2006 and due January 1, 2016, with interest payable annually on January 1.

Instructions
Compute the amounts of each of the following (show computations):
1.	Weighted-average accumulated expenditures qualifying for capitalization of interest cost.
2.	Avoidable interest incurred during 2010.
3.	Total amount of interest cost to be capitalized during 2010.




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