1 Martinez Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of€4,360,000 on January 1, 2022. Martinez expected to complete the building by December 31, 2022. Martinez has the followingdebt obligations outstanding during the construction period.Construction loan-12% interest, payable semiannually, issued December 31, 2021€1,780,000Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 20231,424,000Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2026890,000 Assume that Martinez completed the office and warehouse building on December 31, 2022, as planned at a total cost of€4,628,000. The following expenditures were made during the period forthis project: January 1, €890,000; April 1, €1,290,000July 1, €1,690,000; and October 1, €560,000. Excess funds from the construction loans were invested during the period andearned €19,600 of investment income. Compute the amount of borrowing costs to be capitalized for this project. (Use interestrates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)Borrowing costs €

Long term debt is that kind of debt which is presented differently from short term debt and also…

Martinez Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €4,360,000 on January 1, 2022. Martinez expected to complete the building by December 31, 2022. Martinez has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2021 €1,780,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2023 1,424,000 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2026 890,000

Martinez Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €4,360,000 on January 1, 2022. Martinez expected to complete the building by December 31, 2022. Martinez has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2021 €1,780,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2023 1,424,000 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2026 890,000

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 9MC

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