7.A building was constructed last year for Agro Co. for use as a production facility.Construction began on January 1 and was completed on December 31. The payments to the contractorwere as follows.DatePayment1/1$600,0003/31700,0009/301,000,00011/1800,000To finance construction of the building, a $1,500,000, 12% construction loan was taken out on January 1.The loan was repaid on December 31. The firm had two sources of general debt: $800,000 note payable,8% annual interest, and $1,200,000 par value bonds, 10% annual interest.Determine the amount of interest to be capitalized

To determine the amount of interest to be capitalized for a construction project, we follow specific…

Answered: 7. A building was constructed last year…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On March 1, Wenger Co. began construction of a small building. Payments of$120,000 were made monthly for three months beginning March 1. The buildingwas completed and ready for occupancy on June 1. In determining the amount ofinterest cost to be capitalized, the weighted-average accumulated expenditures area. $30,000.b. $60,000c. $120,000.d. $240,000.
On January 1, 20x1, Entity A obtained a 10%, ₱5,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income of ₱180,000. The construction was completed on December 31, 20x1 for total construction costs of ₱7,000,000. How much is the cost of the building on initial recognition? * A. 7,320,000 B. 7,500,000 C. 6,680,000 D. 7,000,000
Bonita Industries is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6440000 on March 1, $5260000 on June 1, and $8850000 on December 31. Bonita Industries borrowed $3190000 on January 1 on a 5-year, 11% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 3-year, $6440000 note payable and an 10%, 4-year, $12650000 note payable.What are the weighted-average accumulated expenditures? $9860000 $20550000 $8435000 $11700000
On January 1, 20x1, Entity A obtained a 12%, ₱6,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income of ₱180,000. The construction was completed on December 31, 20x1 for a total construction cost of ₱7,000,000. How much is the historical cost of the newly constructed building? 7,540,000 3. 7,000,000 7,480,000 4. 6,460,000
Zahir company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $900,000 on March 1, $600,000 on June 1, and $1,500,000 on December 31. Zahir company borrowed $500,000 on March 1 on a 5-year, 12% note to finance the construction of building. In addition, the company had outstanding all year a 10%, 5-year $1,000000 note payable and an 11%, 4-year, $1,750,000 note payable. Compute the following:(a) Weighted-average accumulated expenditure.(b) Capitalization rate used for interest capitalization purpose.(c) Avoidable interest
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $530,000; March 31, $630,000; June 30, $430,000; October 30, $690,000. The company arranged a 10% loan on January 1 for $760,000. Assume the $760,000 loan is not specifically tied to the construction of the building. The company’s other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 13% and 6%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).
on 30.11.20X1 the company undertook the maintenance of a customer's machines in exchange for the total amount of €6000. on the same date he received the amount of €4000, the amount registered as an advance payment. By the end of the year, the company had completed 60% of the total project, with the remainder to be completed next fiscal year. The mentioned amounts are considered significant.a. registration initialb. adjustment record
Ayayai Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $3,600,000 on March 1, $2,400,000 on June 1, and $6,000,000 on December 31.Ayayai Company borrowed $2,000,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $4,000,000 note payable and an 11%, 4-year, $7,000,000 note payable. Compute avoidable interest for Ayayai Company. Use the weighted-average interest rate for interest capitalization purposes. (Round "Weighted-average interest rate" to 4 decimal places, e.g. 0.2152 and final answer to 0 decimal places, e.g. 5,275.)
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $590,000; March 31, $690,000, June 30, $490,000; October 30, $870,000. The company arranged a 8% loan on January 1 for $880,000. Assume the $880,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 12% and 7%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. A company constructs a building for its own use. Construction began on January 1 and ended on December The expenditures for construction were as follows: January 1, $590,000; March 31, $690,000; June 30, $490,000; October 30, $870,0 00. The company arranged a 8% loan on January 1 for $880,000. Assume the $880,000 loan is not…
Sheffield Corp. is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6470000 on March 1, $5340000 on June 1, and $7950000 on December 31. Sheffield Corp. borrowed $3250000 on January 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 8%, 3-year, $6450000 note payable and an 9%, 4-year, $12350000 note payable. What is the weighted-average interest rate used for interest capitalization purposes
Headland Company is constructing a building Construction began on February 1 and was completed on December 31 . Expenditures were $2,076,000 on March 1,$1,224,000 on June 1 and $3,076,600 on December 31. Headland Company borrowed $1,155,090 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%,5-year, $2,376,900 note payable and an 10%,4-year, $3,397,000 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, es. 7.58%.
Tamarisk Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,980,000 on March 1, $1,260,000 on June 1, and $3,040,930 on December 31. Tamarisk Company borrowed $1,078,330 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,012,400 note payable and an 10%, 4-year, $3,382,000 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.) Weighted-average interest rate: %

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