Tamarisk Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €4,420,000 on January 1, 2022. Tamarisk expected to complete the building by December 31, 2022. Tamarisk has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2021 €1810,000 Short-termloan-10% interest, payable monthly, and principal payable at maturity on May 30, 2023 1,448,000 Long-term loan-119% interest, payable on January 1 of each year. Principal payable on January 1, 2026 905,000 (a) Assume that Tamarisk completed the office and warehouse building on December 31, 2022, as planned at a total cost of €4,706,000. The following expenditures were made during the period forthis project January 1, €905,000; April 1, €1,305,000; July 1, €1,705,000; and October 1, €560,000. Excess funds from the construction loans were invested during the period and earned €20,200 of investment income. Compute the amount of borrowing costs to be capitalized for this project (Use interest rates rounded to 2 decimal places, eg. 7.58% for computational purposes and round final answers to 0 decimal places, eg. 5,275.) Borrowing costs €
Tamarisk Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €4,420,000 on January 1, 2022. Tamarisk expected to complete the building by December 31, 2022. Tamarisk has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2021 €1810,000 Short-termloan-10% interest, payable monthly, and principal payable at maturity on May 30, 2023 1,448,000 Long-term loan-119% interest, payable on January 1 of each year. Principal payable on January 1, 2026 905,000 (a) Assume that Tamarisk completed the office and warehouse building on December 31, 2022, as planned at a total cost of €4,706,000. The following expenditures were made during the period forthis project January 1, €905,000; April 1, €1,305,000; July 1, €1,705,000; and October 1, €560,000. Excess funds from the construction loans were invested during the period and earned €20,200 of investment income. Compute the amount of borrowing costs to be capitalized for this project (Use interest rates rounded to 2 decimal places, eg. 7.58% for computational purposes and round final answers to 0 decimal places, eg. 5,275.) Borrowing costs €
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 45P
Related questions
Question
please do this correctly
Transcribed Image Text:Tamarisk Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of
€4,420,000 on January 1, 2022. Tamarisk expected to complete the building by December 31, 2022. Tamarisk has the following debt
obligations outstanding during the construction period.
Construction loan-12% interest, payable semiannually, issued December 31, 2021
€1,810,000
Short-termloan-10% interest, payable monthly, and principal payable at maturity on May 30, 2023
1,448,000
Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2026
905,000
(a)
Assume that Tamarisk completed the office and warehouse building on December 31, 2022, as planned at a total cost of
€4,706,000. The following expenditures were made during the period forthis project: January 1, €905,000; April 1, €1,305,000;
July 1, €1,705,000; and October 1, €560,000. Excess funds from the construction loans were invested during the period and
earned €20,200 of investment income. Compute the amount of borrowing costs to be capitalized for this project (Use interest
rates rounded to 2 decimal places, eg. 7.58% for computational purposes and round final answers to O decimal places, eg. 5,275.)
Borrowing costs
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning