ta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019:
ta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019:
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 9P
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Question
Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:
- Capitalization period: January 1, 2019, to June 30, 2020
- Expenditures on project:
2019: January 1 $ 456,000 May 1 417,000 October 1 648,000 2020: March 1 1,512,000 June 30 708,000 - Amounts borrowed and outstanding:
$1.7 million borrowed at 10%, specifically for the project
$7 million borrowed on July 1, 2018, at 12%
$14 million borrowed on January 1, 2017, at 6%
Required:
Note: Round all final numeric answers to two decimal places.
- Compute the amount of interest costs capitalized each year.
Capitalized interest, 2019 $___________________ Capitalized interest, 2020 $___________________ - If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line
depreciation in 2020.
$________________
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