On January 1, 2022, Affable Co. contracted with a contractor to construct a building for P20,000,000. The entityis required to make five payments in 2022 with the last payment scheduled on the date of completion. Thebuilding was completed on December 31, 2022. The entity made the following payments during 2022:January 1P 2,000,000March 314,000,000June 306,100,000September 304,400,000December 313,500,00020,000,000The entity had the following debt outstanding on December 31, 2022:12% 4-year note dated January 1,8,500,0002022, with interest compoundedquarterly, both principal and interestdue December 31, 2025, relatingspecifically to the building project.Round off future value factors to four(4) decimal places (e.g., 6.6667) 10% 10-year note dated December31, 2018 with simple interest payableannually on December 3112% 5-year note dated December 31,2020 with simple interest payableannually on December 316,000,0007,000,000Questions:1. Compute the weighted average expenditures on the building.2. Compute the capitalized borrowing cost in 2022.(

Capitalized interest is not immediately expensed on a company's income statement, in contrast to…

On January 1, 2022, Affable Co. contracted with a contractor to construct a building for P20,000,000. The entity is required to make five payments in 2022 with the last payment scheduled on the date of completion. The building was completed on December 31, 2022. The entity made the following payments during 2022: January 1 P 2,000,000 March 31 4,000,000 June 30 6,100,000 September 30 4,400,000 December 31 3,500,000 20,000,000 The entity had the following debt outstanding on December 31, 2022: 8,500,000 12% 4-year note dated January 1, 2022, with interest compounded quarterly, both principal and interest due December 31, 2025, relating specifically to the building project. Round off future value factors to four (4) decimal places (e.g., 6.6667)

On January 1, 2022, Affable Co. contracted with a contractor to construct a building for P20,000,000. The entity is required to make five payments in 2022 with the last payment scheduled on the date of completion. The building was completed on December 31, 2022. The entity made the following payments during 2022: January 1 P 2,000,000 March 31 4,000,000 June 30 6,100,000 September 30 4,400,000 December 31 3,500,000 20,000,000 The entity had the following debt outstanding on December 31, 2022: 8,500,000 12% 4-year note dated January 1, 2022, with interest compounded quarterly, both principal and interest due December 31, 2025, relating specifically to the building project. Round off future value factors to four (4) decimal places (e.g., 6.6667)

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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On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.
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