Interest During Construction Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $252,000 (includes cost of purchasing land of $150,000) May 1 320,000 July 1 450,000 October 31 275,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: Compute the amount of interest capitalized related to the construction of the building. $fill in the blank 1 If the expenditures are assumed to have been incurred evenly throughout the year:Compute weighted average accumulated expenditures $fill in the blank 2 Compute the amount of interest capitalized on the building $fill in the blank 3
Interest During Construction Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $252,000 (includes cost of purchasing land of $150,000) May 1 320,000 July 1 450,000 October 31 275,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: Compute the amount of interest capitalized related to the construction of the building. $fill in the blank 1 If the expenditures are assumed to have been incurred evenly throughout the year:Compute weighted average accumulated expenditures $fill in the blank 2 Compute the amount of interest capitalized on the building $fill in the blank 3
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
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 18E
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Interest During Construction
Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were:
January 1 | $252,000 | (includes cost of purchasing land of $150,000) |
May 1 | 320,000 | |
July 1 | 450,000 | |
October 31 | 275,000 |
In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year.
Required:
- Compute the amount of interest capitalized related to the construction of the building.
$fill in the blank 1 - If the expenditures are assumed to have been incurred evenly throughout the year:Compute weighted average accumulated expenditures
-
$fill in the blank 2
Compute the amount of interest capitalized on the building$fill in the blank 3
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