On January 1, 2024, a company began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2025. Expenditures on the project were as follows:
January 1, 2024 $ 200,000
September 1, 2024 $ 300,000
December 31, 2024 $ 300,000
March 31, 2025 $ 300,000
September 30, 2025 $ 200,000
The company borrowed $750,000 on a construction loan at 12% interest on January 1, 2024. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2024 and 2025.
Interest (using the specific interest method) capitalized for 2025 was:
$86,805.
$87,875.
$67,500.
$104,625.