Doeren Inc. began constructing a building for its use on January 1, 2022. All costs associated with the construction are being debited to an account called “Construction-in-Progress.” The construction will take approximately 24 months. Weighted-average expenditures for 2022 have already been determined to be $5,000,000. The company has one specific, as well as two non-specific loan borrowings. Details are as follows: Specific Loan Borrowing: $4,000,000 loan at 9% taken out 1/1/2022 and due in 2025. Non-specific Borrowings: Note #1: $2,000,000 at 10%. This loan was outstanding for all of 2022 and is due in 2023. Note #2: $500,000 at 12%. This loan was outstanding for all of 2022 and is due in 2024. A) What portion of the interest on all of its loans should be capitalized in 2022?
Doeren Inc. began constructing a building for its use on January 1, 2022. All costs associated with the construction are being debited to an account called “Construction-in-Progress.” The construction will take approximately 24 months. Weighted-average expenditures for 2022 have already been determined to be $5,000,000. The company has one specific, as well as two non-specific loan borrowings. Details are as follows: Specific Loan Borrowing: $4,000,000 loan at 9% taken out 1/1/2022 and due in 2025. Non-specific Borrowings: Note #1: $2,000,000 at 10%. This loan was outstanding for all of 2022 and is due in 2023. Note #2: $500,000 at 12%. This loan was outstanding for all of 2022 and is due in 2024. A) What portion of the interest on all of its loans should be capitalized in 2022?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 26E
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Doeren Inc. began constructing a building for its use on January 1, 2022. All costs associated with the construction are being debited to an account called “Construction-in-Progress.” The construction will take approximately 24 months. Weighted-average expenditures for 2022 have already been determined to be $5,000,000.
The company has one specific, as well as two non-specific loan borrowings. Details are as follows:
Specific Loan Borrowing: $4,000,000 loan at 9% taken out 1/1/2022 and due in 2025.
Non-specific Borrowings:
- Note #1: $2,000,000 at 10%. This loan was outstanding for all of 2022 and is due in 2023.
- Note #2: $500,000 at 12%. This loan was outstanding for all of 2022 and is due in 2024.
A) What portion of the interest on all of its loans should be capitalized in 2022?
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