On January 1,2014,Mercury Airlines Contracted with Dover Aircraft to Construct

Essay

On January 1,2014,Mercury Airlines contracted with Dover Aircraft to construct an aircraft to Mercury's specifications at a cost of $2,000,000.During 2014,Mercury paid Dover $400,000 on January 1,and another $250,000 on September 30.On January 1,Mercury borrowed $360,000 at 13% to partially finance the construction,an obligation still outstanding at the end of 2014.The remaining amount paid to Dover was financed from available working capital.Mercury has approximately $1,600,000 of additional debt outstanding at an average interest cost of 12%.
Required:
What is the total capitalized cost of the aircraft under construction at the end of 2014?