Acctg 5110Research Memo #2Due December 3, 2015Submit on

Acctg 5110Research Memo #2Due December 3, 2015Submit on CanvasHunter Company is in the planning phase for a major plant expansion, which willinvolve the construction of a new warehouse. The construction is expected to takeapproximately 18 months and cost $1.8 million. The construction will be financedwith a 10-year loan from Century Bank (The loan will be taken out on the first day ofconstruction). The warehouse will be built on land that is already owned by thecompany. The land was purchased last month with a 15-year, $1 million loan fromFoundation Bank. The companyâ€s president, Sam Stone, knows that the material,labor and overhead costs related to construction of the warehouse can becapitalized. However, the president does not believe that any interest cost incurredduring construction on the construction loan or the loan for the land can becapitalized, since it is a financing expense.Research the generally accepted accounting principles and prepare a short memo tothe president regarding his conclusion about interest cost. You must cite yourreference and applicable paragraph numbers.