(Capitalization of Borrowing Costs) In early February 2023, Huey Corp an addition to its head office building that is expected to take 18 mont following 2023 expenditures relate to the addition: Feb. 1 Payment 120,000 Mar. 1 Payment to architect 24,000 July 1 Payment # Payment #3 to contractor 180,000 Dec. 31 A- 60,000 Dec. 1 $384,000 On February 1, Huey issued a $100,000, three-year note p to finance most of the initial payment to the contractor. No other asset entered into. Details of other interest-bearing debt during the period table below: Other Debt Instruments Outstanding-2023 Principal
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- Coal Company began constructing a building for its own use in January 2023. During 2023, Coal incurred interest of P50,000 on specific construction debt, and P20,000 on other borrowings. Interest computed on the weighted-average amount of accumulated expenditures for the building during 2023 was P40,000. What amount of interest cost should Coal capitalize? a. 20,000 b. 40,000 c. 50,000 d. 70,000On January 1, 2023, the Balmond Company began construction of a building to be used as its office headquarters. The building was completed on December 31, 2024. Expenditures on the project were as follows: Expenditures for 2023 Expenditures for 2024 January 3 1,000,000 January 31 300,000 March 31 1,200,000 March 31 500,000 June 30 800,000 May 31 600,000 October 1 600.000 Florida had the following borrowings during 2023. The borrowings were made for specific and general purposes but the proceeds were used in part to finance the construction of a new building: Florida had the following borrowings during 2023. The borrowings were made for specific and general purposes but the proceeds were used in part to finance the construction of a new building: Principal Annual interest 12% Construction loan 2,000,000 240,000 7.6% Long-term note 5,000,000 380,000 6% Mortgage payable 3,000,000 180,000 All debts were outstanding during all of 2023 and 2024. The total interest expense at the end of…Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 456,000 May 1 417,000 October 1 648,000 2020: March 1 1,512,000 June 30 708,000 Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $7 million borrowed on July 1, 2018, at 12% $14 million borrowed on January 1, 2017, at 6% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $___________________ Capitalized interest, 2020 $___________________ If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2020. $________________
- On January 1, 2020, Karakaraka Co. started construction of a new office building on January 1, 2020, and moved into the finished building on July 1, 2021. Of the P25,000 total cost of the building, P20,000 was incurred in 2020 evenly throughout the year. The entity’s incremental borrowing rate was 12% throughout 2020, and the total amount of interest incurred was P1,020,000. What amount should be reported as capitalized interest on December 31, 2020?Rona Co. had 9% P2,000,000 specific construction loan and 12% P15,000,000 general loan outstanding during 2023 and 2024. The entity began the self-construction of a new building on August 1, 2023 and the building was completed on September 30, 2024. Expenditures during 2023 and 2024 were August 1, 2023, P2,000,000; October 1, 2023, P4,000,000; December 1, 2023, P3,000,000; and July 1, 2024, P900,000. 3) What is the cost of the new building on September 30, 2024? A. 9,225,000 B. 9,900,000 C. 10,937,250 D. 10,337,250 4) What is the interest expense for 2024? A. 1,980,000 B. 1,122,750 C. 1,167,750 D. 0Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 504,000 May 1 405,000 October 1 504,000 2020: March 1 1,392,000 June 30 540,000 Amounts borrowed and outstanding: $1.6 million borrowed at 10%, specifically for the project $6 million borrowed on July 1, 2018, at 12% $13 million borrowed on January 1, 2017, at 6% Instructions: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2020. $ fill in the blank 3
- Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 456,000 May 1 489,000 October 1 588,000 2020: March 1 1,572,000 June 30 552,000 Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $6 million borrowed on July 1, 2018, at 12% $10 million borrowed on January 1, 2017, at 6% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2020. $ fill in the blank 3On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,240,000 March 1, 2021 660,000 June 30, 2021 450,000 October 1, 2021 650,000 January 31, 2022 900,000 April 30, 2022 1,215,000 August 31, 2022 2,160,000 On January 1, 2021, the company obtained a $3 million construction loan with a 12% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $5,400,000 and $7,400,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required:1. Calculate the amount of interest that Mason should…On January 1, 2021, the company obtained a $3 million loan with a 10% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,080,000 March 1, 2021 900,000 June 30, 2021 320,000 October 1, 2021 700,000 January 31, 2022 720,000 April 30, 2022 1,035,000 August 31, 2022 1,800,000 On January 1, 2021, the company obtained a $3 million construction loan with a 10% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $5,000,000 and $7,000,000 with interest rates of 5% and 8%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required: Calculate the amount of interest that Mason should…
- Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between January 1 and December 31, 2019. Snowbird made the following expenditures related to this building: April 1 $396,000 July 1 400,000 September 1 510,000 December 1 120,000 The company borrowed $500,000 at 12% to help finance the project. In addition, Snowbird had outstanding borrowings of $2 million at 8% and $1 million at 9%. Required: Compute the amount of interest capitalized related to the construction of the building. Do not round your interim calculations. Round your final answer to the nearest dollar. Next Level In the current period, the capitalization of interest ; in future period the effect of capitalized interest is to .ABC Company obtained a loan of $100,000 at 10% annual interest rate on January 1, 2022. The loan was used to finance a project that qualifies for capitalization of borrowing costs. The company incurs $2,000 in loan processing fees and $1,500-in legal fees related to the loan. The project is completed on December 31, 2022. The weighted average cost of capital of ABC Company is 12%. Compute the amount of borrowing costs to be capitalized and the amount to be expensed in the income statement for the year ended December 31, 2022.Jen Company had a 10% P3,000,000 specific construction loan and 12% P25,000,000 general loan outstanding during 2021 and 2022. The entity began the self-construction of a building on January 1, 2021 and was completed on December 31, 2022. The following expenditures were made during 2021 and 2022:January 1, 2021 4,000,000 April 1, 2021 5,000,000 December 1, 2021 3,000,000 March 1, 2022 6,000,000 1) What is the cost of the building on December 31, 2022? A. 18,000,000 B. 20,988,000 C. 19,980,000 D. 20,100,000 2) What amount of interest expense should be reported for 2022? A. 3,000,000 B. 3,300,000 C. 1,212,000 D. 912,000