Required 1 Required 2How much interest expense will San Antonio report in its 2021 income statement? (Do not round intermediate calculations.Round your final answer to the nearest whole dollar.)Interest expense Early In Its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage wascompleted on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchasedby paying $200,000 Immediately and signing a noninterest-bearing note requiring the company to pay $600,000 on March 28, 2023.An Interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, Insurance, and otherclosing costs totaling $20,000 were paid at closing.At the end of April, the old building was demolished at a cost of $70,000, and an additional $50,000 was paid to clear and grade theland. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows:(FV of $1. PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)May 1July 30September 1October 1San Antonio borrowed $3,000,000 at 8% on May 1 to help finance construction. This loan, plus interest, will be paid in 2022. Thecompany also had a $5,250,000, 8% long-term note payable outstanding throughout 2021.$1,200,0001,500,000900,0001,800,000In November, the company purchased 10 identical pieces of equipment and office furniture and fixtures for a lump-sum price of$600,000. The fair values of the equipment and the furniture and fixtures were $455,000 and $245,000, respectively. In December,San Antonio paid a contractor $285,000 for the construction of parking lots and for landscaping.Required:1. Determine the initial values of the various assets that San Antonio acquired or constructed during 2021. The company uses thespecific Interest method to determine the amount of Interest capitalized on the building construction. (Hint: Expenditures on March28 and April 30 to acquire land on which to construct the building are included as part of accumulated expenditures for determiningthe amount of Interest capitalized on the building. This means the Interest capitalization period begins on March 28.)2. How much Interest expense will San Antonio report in Its 2021 Income statement?Complete this question by entering your answers in the tabs below.Required 1Determine the initial values of the various assets that San Antonio acquired or constructed during 2021. The company usesthe specific interest method to determine the amount of interest capitalized on the building construction. (Hint: Expenditureson March 28 and April 30 to acquire land on which to construct the building are included as part of accumulated expendituresfor determining the amount of interest capitalized on the building. This means the interest capitalization period begins onMarch 28.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)AssetsRequired 2LandLand improvementsBuildingEquipmentFurniture & fixturesInitial ValueS 854,403S 285,000S 390,000$ 210,000Show less

Assets are resources owned by business. It is of two types tangible assets and intangible assets.…

Required 1 Required 2 How much interest expense will San Antonio report in its 2021 income statement? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) Interest expense

Required 1 Required 2 How much interest expense will San Antonio report in its 2021 income statement? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) Interest expense

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 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $270,000 immediately and signing a noninterest-bearing note requiring the company to pay $670,000 on March 28, 2023. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $27,000 were paid at closing. At the end of April, the old building was demolished at a cost of $77,000, and an additional $57,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: May 1 $2,250,000 July 30 1,850,000 September 1 1,320,000 October 1 2,220,000 San Antonio borrowed $4,100,000 at 8% on May 1 to help…
Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $270,000 immediately and signing a noninterest-bearing note requiring the company to pay $670,000 on March 28, 2023. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $27,000 were paid at closing.At the end of April, the old building was demolished at a cost of $77,000, and an additional $57,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) May 1 $ 2,250,000…
Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $270,000 immediately and signing a noninterest-bearing note requiring the company to pay $670,000 on March 28, 2023. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $27,000 were paid at closing.At the end of April, the old building was demolished at a cost of $77,000, and an additional $57,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)San Antonio borrowed $4,100,000 at 8%…
Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $270,000 immediately and signing a noninterest-bearing note requiring the company to pay $670,000 on March 28, 2023. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $27,000 were paid at closing.At the end of April, the old building was demolished at a cost of $77,000, and an additional $57,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: May 1 $ 2,250,000 July 30 1,850,000 September 1 1,320,000 October 1 2,220,000 San Antonio borrowed $4,100,000 at 8% on…
Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $270,000 immediately and signing a noninterest-bearing note requiring the company to pay $670,000 on March 28, 2023. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $27,000 were paid at closing.At the end of April, the old building was demolished at a cost of $77,000, and an additional $57,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: May 1 $2,250,000 July 30 1,850,000 September 1 1,320,000 October 1 2,220,000 How much interest expense will San Antonio report in its 2021…
Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $330,000 immediately and signing a noninterest-bearing note requiring the company to pay $730,000 on March 28, 2023. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $33,000 were paid at closing. At the end of April, the old building was demolished at a cost of $83,000, and an additional $63,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) May 1 July 30 September 1 October 1…
Early in its fiscal year ending December 31, 2024, San Antonio Outfitters finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $210,000 immediately and signing a noninterest-bearing note requiring the company to pay $610,000 on March 28, 2026. An interest rate of 8% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $21,000 were paid at closing. At the end of April, the old building was demolished at a cost of $71,000, and an additional $51,000 was paid to clear and grade the land. Construction of a new building began on May 1 and was completed on October 29. Construction expenditures were as follows: May 1 July 30 September 1 October 1 $ 1,350,000 1,550,000 960,000 1,860,000 San Antonio borrowed $3,000,000 at 8% on May 1 to help finance construction. This…
On January 3, 2024, Michelson & Sons acquired a tract of land just outside the city limits. The land and existing building were purchased for $2.4 million. Michelson paid $400,000 and signed a noninterest-bearing note requiring the company to pay the remaining $2,000,000 on December 31, 2025. An interest rate of 7% properly reflects the time value of money for this type of loan agreement. Transfer taxes, title insurance, and other costs totaling $24,000 were paid at closing. At the end of February, the old building was demolished at a cost of $120,000, and an additional $100,000 was paid to clear and grade the land. Construction of a new building began on March 1 and was completed on October 30. Construction expenditures were as follows: $ 800,000 March 30 June 30 July 30 1,200,000 September 1 600,000 Michelson did not borrow specifically for the construction project, but did have the following debt outstanding throughout 2024: 1,200,000 $6,000,000, 8% long-term note payable…
Braxton Technologies, Incorporated, constructed a conveyor for A&G Warehousers that was completed and ready for use on January 1, 2024. • A&G paid for the conveyor by Issuing a $100,000, four-year note that specified 5% Interest to be paid on December 31 of each year, and the note is to be repaid at the end of four years. • The conveyor was custom-built for A&G, so Its cash price was unknown. • By comparison with similar transactions it was determined that a reasonable Interest rate was 10%. Required: 1. Prepare the journal entry for A&G's purchase of the conveyor on January 1, 2024. 2. Prepare an amortization schedule for the four-year term of the note. 3. Prepare the journal entry for A&G's third Interest payment on December 31, 2026. 4. If A&G's note had been an installment note to be paid in four equal payments at the end of each year beginning December 31, 2024, what would be the amount of each installment? 5. By considering the installment payment of requirement 4, prepare an…
On June 1, 2020, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2021. Expenditures on the project were as follows ($ in millions): July 1, 2020 94 October 1, 2020 62 February 1, 2021 70 April 1, 2021 41 September 1, 2021 40 October 1, 2021 26 On July 1, 2020, Crocus obtained a $110 million construction loan with a 6% interest rate. The loan was outstanding through the end of October, 2021. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8%. This note was outstanding during all of 2020 and 2021. The company's fiscal year-end is December 31.What is the amount of interest that Crocus should capitalize in 2020, using the specific interest method?
On June 1, 2023, a company began construction of a new manufacturing plant. The plant was completed on October 31, 2024. Expenditures on the project were as follows ($ in millions): July 1, 2023 October 1, 2023 February 1, 2024 April 1, 2024 September 1, 2024 October 1, 2024 On July 1, 2023, the company obtained a $94 million construction loan with a 8% interest rate. The loan was outstanding through the end of October, 2024. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 10%. This note was outstanding during all of 2023 and 2024. The company's fiscal year-end is December 31. What is the amount of interest that should be capitalized in 2023, using the specific interest method? Multiple Choice $3.99 million $4.04 million 78 46 54 33 32 18 $5.05 million None of the other answer choices are correct
On December 31, 2019, Pronghorn Inc. borrowed $4,140,000 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, $496,800; June 1, $828,000; July 1, $2,070,000; December 1, $2,070,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $5,520,000 6-year, 11% note, dated December 31, 2017, interest payable annually $2,208,000 2. March 1, 2020, expenditure included land costs of $207,000 3. Interest revenue earned in 2020 $67,620 (a) Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest %24