On March 1, 2023, Spoelstra, Inc. borrows $1.120,000 on a three year, 8% loan to finance construction of a new building. Spoelstra also has $2,000,000 of 5% debt outstanding for all of 2023. During 2023, the following events occur: 6/1/23 - Spoelstra makes a $332.000 payment to the construction contractor, and work begins on the project. 8/1/23-Spoelstra makes a $387,000 progress payment to the construction contractor. 11/1/23-Spoelstra makes a final payment of $299,000 to the contractor upon completion of construction. How much interest cost should be capitalized into the cost of the building?
On March 1, 2023, Spoelstra, Inc. borrows $1.120,000 on a three year, 8% loan to finance construction of a new building. Spoelstra also has $2,000,000 of 5% debt outstanding for all of 2023. During 2023, the following events occur: 6/1/23 - Spoelstra makes a $332.000 payment to the construction contractor, and work begins on the project. 8/1/23-Spoelstra makes a $387,000 progress payment to the construction contractor. 11/1/23-Spoelstra makes a final payment of $299,000 to the contractor upon completion of construction. How much interest cost should be capitalized into the cost of the building?
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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Transcribed Image Text:On March 1, 2023, Spoelstra, Inc. borrows $1.120,000 on a three year, 8% loan to finance construction of a new building.
Spoelstra also has $2,000,000 of 5% debt outstanding for all of 2023.
During 2023, the following events occur:
6/1/23 - Spoelstra makes a $332,000 payment to the construction contractor, and work begins on the project.
8/1/23 - Spoelstra makes a $387,000 progress payment to the construction contractor.
11/1/23-Spoelstra makes a final payment of $299,000 to the contractor upon completion of construction.
How much interest cost should be capitalized into the cost of the building?
Transcribed Image Text:Popovich Corp, exchanges a machine with an original cost of $573,000 and accumulated depreciation of $304,000 for a new
machine with a fair value of $155,000 and $13,800 cash. The exchange has commercial substance.
What amount of gain or loss should Popovich report? Enter a gain as a positive number or a loss as a negative number.
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