On january 1, 2021, the company obtained a $3 million construction loan with a 10% interest rate. the loan was outstanding all of 2021 and 2022. the company’s other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. both notes were outstanding during all of 2021 and 2022. interest is paid annually on all debt. the company’s fiscal year-end is december 31.
calculate the amount of interest that mason should capitalize in 2021 and 2022 using the specific interest method.
what is the total cost of the building?
calculate the amount of interest expense that will appear in the 2021 and 2022 income statements.