P and S1 Sample Clauses

P and S1 are the members of a consolidated group. In 1995, S1 begins and completes the construction of a shopping center and is required to capitalize interest with respect to the construction. S1’s aver- age excess expenditures for 1995 are $5,000,000. Throughout 1995, S1’s only bor- rowings include a $6,000,000 loan from P bear- ing interest at an annual rate of 10 percent ($600,000 per year). Under the avoided cost method, S1 is required to capitalize interest in the amount of $500,000 ([$600,000÷$6,000,000×5,000,000).
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