On December 31, 2019, Crane Inc. borrowed $3,780,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $453,600; June 1,, $756,000; July 1, $1,890,000; December 1, $1,890,000. The building was completed in February 2021. Additional information is provided as follows. Other debt outstanding 1. $5,040,000 10-year, 14% bond, December 31, 2013, interest payable annually $2,016,000 6-year, 11% note, dated December 31, 2017, interest payable annually March 1,2020, expenditure included land costs of $189,000 2. $61,740 3. Interest revenue earned in 2020 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. S The amount of interest Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Date December 31, 2020
On December 31, 2019, Crane Inc. borrowed $3,780,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $453,600; June 1,, $756,000; July 1, $1,890,000; December 1, $1,890,000. The building was completed in February 2021. Additional information is provided as follows. Other debt outstanding 1. $5,040,000 10-year, 14% bond, December 31, 2013, interest payable annually $2,016,000 6-year, 11% note, dated December 31, 2017, interest payable annually March 1,2020, expenditure included land costs of $189,000 2. $61,740 3. Interest revenue earned in 2020 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. S The amount of interest Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Date December 31, 2020
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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intermediate accounting
Transcribed Image Text:On December 31, 2019, Crane Inc. borrowed $3,780,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures
related to this building: March 1, $453,600; June 1,, $756,000; July 1, $1,890,000; December 1, $1,890,000. The building was completed in February 2021. Additional information is
provided as follows.
Other debt outstanding
1.
$5,040,000
10-year, 14% bond, December 31, 2013, interest payable annually
$2,016,000
6-year, 11% note, dated December 31, 2017, interest payable annually
March 1,2020, expenditure included land costs of $189,000
2.
$61,740
3.
Interest revenue earned in 2020
Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building.
S
The amount of interest
Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2020. (Credit account titles are automatically indented
when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Account Titles and Explanation
Debit
Credit
Date
December 31, 2020
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