On 3/1/12, Celine Company contracted with Axle Construction to have a new building constructed on its own land for $3,000,000. Celine made payments to Axle as follows:
Celine had long-term debt outstanding at the time of the construction (a 12%, 5-year note payable of $1,000,000, dated 4/1/08, with interest payable on 4/1, and a 10%, 10-year bond issue of $1,500,000, sold a par on 6/30/04, with interest payable semiannually on 6/30 and 12/31), but on 3/31/12, Celine borrowed an additional $1,000,000 at 9% to support construction of the building.
Construction was completed and the building was ready for occupancy on September 30, 2012.
What amount of interest (if any) will Celine capitalize in 2012?
What is the balance of the Buildings and Interest Expense accounts at 12/31/12?
What adjusting entry would Celine make at 12/31/12 if Celine were to depreciate this building over 30 years, using straight-line method and assuming 100,000 salvage value?