OweSubject: acounting Question 2View PoliciesShow Attempt HistoryCurrent Attempt in ProgressIvanhoe Furniture Company started construction of a combination office and warehouse building for its own use at arestimated cost of $6,000,000 on January 1, 2020. Ivanhoe expected to complete the building by December 31, 2020.Ivanhoe has the following debt obligations outstanding during the construction period.Construction loan-14% interest, payable semiannually, issued December 31, 2019Short-term loan-12% interest, payable monthly, and principal payable at maturity on May 30, 2021Long-term loan-13% interest, payable on January 1 of each year. Principal payable on January 1, 2024$2,400,0001,680,0001,200,000 Assume that Ivanhoe completed the office and warehouse building on December 31, 2020, as planned at a total costof $6,240,000, and the weighted-average amount of accumulated expenditures was $4,320,000. Compute theavoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% forcomputational purposes and round final answers to O decimal places, e.g. 5,275.)Avoidable Interest $eTextbook and Media* Your answer is incorrect.830680Compute the depreciation expense for the year ended December 31, 2021. Ivanhoe elected to depreciate thebuilding on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of$360,000. (Round answer to 0 decimal places, e.g. 5,275.)Depreciation Expense $223689

GIVEN THAT,ESTIMATED COST = $6,000,000TOTAL COST = $6,240,000ACCUMULATED EXPENDITURES =$4,320,000

Ivanhoe Furniture Company started construction of a combination office and warehouse building for its own use at ar estimated cost of $6,000,000 on January 1, 2020. Ivanhoe expected to complete the building by December 31, 2020. Ivanhoe has the following debt obligations outstanding during the construction period. Construction loan-14% interest, payable semiannually, issued December 31, 2019 Short-term loan-12% interest, payable monthly, and principal payable at maturity on May 30, 2021 Long-term loan-13% interest, payable on January 1 of each year. Principal payable on January 1, 2024 $2,400,000 1,680,000 1,200,000

Ivanhoe Furniture Company started construction of a combination office and warehouse building for its own use at ar estimated cost of $6,000,000 on January 1, 2020. Ivanhoe expected to complete the building by December 31, 2020. Ivanhoe has the following debt obligations outstanding during the construction period. Construction loan-14% interest, payable semiannually, issued December 31, 2019 Short-term loan-12% interest, payable monthly, and principal payable at maturity on May 30, 2021 Long-term loan-13% interest, payable on January 1 of each year. Principal payable on January 1, 2024 $2,400,000 1,680,000 1,200,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 106.3C

See similar textbooks

Similar questions

Question Content AreaOn January 1, 2019, Olvert Corp. signed a contract to have Bob's Builders construct a distribution center at a cost of $10,000,000. It was estimated that it would take two years to complete the project. Also on January 1, 2021, to finance the construction cost, Tolvin borrowed $10,000,000 payable in five annual installments of $4,000,000 plus interest at the rate of 6%. During 2021, Tolvin made the following construction-related expenditures: Date Amount 2/1 $2,200,000 5/1 $1,700,000 8/1 $ 700,000 11/1 $ 400,000 What amount should Tolvin report as capitalized interest at December 31, 2021? $300,000 $207,000 $150,000 $621,000
Question 1 Kingbird Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $13,000,000 on January 1, 2025. Kingbird expected to complete the building by December 31, 2025. Kingbird has the following debt obligations outstanding during the construction period. Construction loan—12% interest, payable semiannually, issued December 31, 2024 $5,200,000 Short-term loan—10% interest, payable monthly, and principal payable at maturity on May 30, 2026 3,900,000 Long-term loan—11% interest, payable on January 1 of each year; principal payable on January 1, 2029 2,600,000 (a) Assume that Kingbird completed the office and warehouse building on December 31, 2025, as planned, at a total cost of $13,520,000, and the weighted-average amount of accumulated expenditures was $9,360,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes…
Q 9 – A company constructs a building for its own use. Construction began on January 1, 2020 and ended on December 31,2020. In 2020, the company made the following expenditures related to this building: January 1, $480,000; March 31, $900,000; June 30, $1,600,000; and October 30, $1,800,000. To help finance construction, the company arranged a 15% construction loan on January 1 for $1,000,000. The company’s other borrowings, outstanding for the whole year, consisted of a $2 million loan and a $4 million note with interest rates of 8% and 6%, respectively. Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. Q 10 –Eshaq Company’s record of transactions concerning part X for the month of February was as follows.
Problem 10-27 (AICPA Adapted)On December 31, 2020, Ames Company leased equipment for 10 years. Theentity contracted to pay P 400, 000 annual rent on December 31, 2020 andon December 31 of each of the next time years.The lease liability was recorded at P 2, 700, 000 on December 31, 2020before the first payment.The equipment’s useful life is 12 years and the interest rate implicit in thelease is 10%.The entity used the straight line method to depreciate all equipment.1. In recording the December 31, 2021 payment by what amount shouldthe lease liability be reduced?a. 270, 000b. 230, 000c. 225, 000d. 170, 0002. What is the interest expense for 2021?a. 270, 000b. 230, 000c. 200, 000d. 03. What is the lease liability on December 31, 2021?a. 2, 700, 000b. 2, 300, 000c. 2, 130, 000
Exercise 19-02 (Part Level Submission) The following information is available for Martinez Corporation for 2019 (its first year of operations). 1. Excess of tax depreciation over book depreciation, $40,400. This $40,400 difference will reverse equally over the years 2020–2023. 2. Deferral, for book purposes, of $19,900 of rent received in advance. The rent will be recognized in 2020. 3. Pretax financial income, $284,700. 4. Tax rate for all years, 20%.
tudent question Time to preview question: PART A: Happy House Cleaning Inc. (“HHC”) was incorporated on May 5, 2020 to provide on-demand house cleaning services. At the time of incorporation, HHC establishes December 31 as its year-end for both tax and accounting purposes. On May 9, 2020, HHC purchased nine cars (CCA Class 10; 30% rate) to be used by the cleaning personnel at a cost of $23,000 per vehicle. On December 2, 2021, HHC trades in two of its old cars for three new minivans. The list price of the new minivans is $28,000 per vehicle and HHC receives a trade-in allowance towards this list price of $12,000 per old vehicle. HHC paid cash for the remaining balance. —REQUIRED Calculate the maximum Class 10 CCA that can be deducted for the years ending December 31, 2020, and 2021. Ignore the leap year. Calculate the opening UCC balance for the following 2022 year. PART B: Cool Rugs Inc., “The Company”, has a December 31 year-end. On January 1, 2021, The Company’s Class…
Question 6 The following events occurred during the year ended 30 June 2020 for Electrical Limited. On 1 June 2020, Electrical Ltd. signed a three-month 11% per annum note payable to purchase a new equipment costing $72,000. Interest and principal are paid at maturity. On 29 June 2020, Electrical Ltd. received deposit in advance of $11,000 from a construction company for completing the electrical work for a new project during the next 6 months. Electricity charges of $46,000 from 24 April to 23 June are payable on 10 July. Electrical’s main product is backed by warranty. Sales of this product for the year totalled $445,000. The opening balance of provision for warranty claims was $12,720. During the year, Electrical’s warranty expense was $38,040 and claims paid to customers totalled $30,240. June sales totalled $312,000. Electrical Ltd. collected GST of 10% on this amount. This is due to be paid to the tax office by the seventh day of the following collection. On 30 June 2020,…
i) Company X Financial Year ends March 31. A laptop purchased 02 August 2018 at a cost of P9,500 was disposed off in January 2020 for P6800. Assuming the organisation follows local GAAPS on depreciation, provide the Journal Entries for this transaction. Outline all assumptions used. (ii) The following in being considered: Purchase of an office building worth P1M from unrestricted funding. Currently, the office building is on a 2-year lease, with rentals of BWP22,000 per month. 11 Provide your recommendations to the Finance Manager. What would be the possible effect on the Financial Health of the organisation if these transactions are approved (iii) List any key financial controls for an NGO and why these are important. (iv) Company X’s year-end is March 31. It is now April 4. A staff member asks you to process an unpaid invoice with details as follows: The invoice is for bus transportation in the amount of P800 and is dated April 2. The invoice indicates the charges relate to…
PROBLEM 38Barcelona Company owns the following properties on December 31, 2020:a. Land intended for sale - P1,000,000b. Building, in the process of construction for rentals - 3,000,000c. Equipment for lease under operating lease - 500,000d. Land held for undetermined use - 2,500,000e. Building intended for leased out under finance lease - 2,800,000f. Land held for future factory site - 1,200,000g. Building use for rentals. A small part of the buildingis used as a satellite administrative office - 4,000,000h. Hotel building on which Barcelona Company providesmonthly maintenance services - 3,500,000 Requirements:1. How do you classify each of the items mentioned above?2. Compute the investment property on December 31, 2020.
Problem 21-05 (Part Level Submission) In 2019, Ivanhoe Trucking Company negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were erected to the company’s specifications on land owned by the company. On January 1, 2020, Ivanhoe Trucking took possession of the lease properties.Although the terminals have a composite useful life of 40 years, the non-cancelable lease runs for 20 years from January 1, 2020, with a bargain purchase option available upon expiration of the lease.The 20-year lease is effective for the period January 1, 2020, through December 31, 2039. Rental payments of $848,000 are payable to the lessor on January 1 of each of the first 10 years of the lease term. Advance rental payments of $339,200 are due on January 1 for each of the last 10 years of the lease. The company has an option to purchase all of these leased facilities for $1 on December 31, 2039. The lease was negotiated to assure…
The Problem 24-6 (IAA) Zephyr Company is provided a grant by a foreign governme for. the purpose of acquiring land for a building site grant is a zero-interest loan for 5 years evidenced hu promissory note. The loan was granted on January 1, 2020 for P8,000;000, The market rate of interest is 6%. The present value of 1 for fiv periods at 6% is .7473. Required: Prepare journal entries for 2020 and 2021.
Problem 10-29 (IFRS)On January 1, 2020, Yemen Company leased an equipment for 6 years fromanother entity. The entity recorded the asset at P 4, 800, 000 which includeda purchase option of P 100, 000.At the commencement date, the lessee is reasonably certain to exercise thepurchase option. The equipment had an eight-year useful life and a fair value of P 300, 000 atthe end of the useful life.On January 1, 2026, the entity did not exercise the purchase option.What is the loss on finance lease to be recognized by Yemen Company for2026?a. 1, 325, 000b. 1, 425, 000c. 200, 000d. 0