XYZ Company is constructing a building Construction began on January 1 and was completed on December 31. Expenditures were €2,400,000 on March 31, €1,980,000 on June 1, and €3,000,000 on December 31. The Company borrowed €1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building In addition, the company had outstanding all year an 11%, 3-year, €2,400,000 note payable and a 10%, 4-year, €4,500,000 note payable. Instructions Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during the year. 3. Total amount of interest cost to be capitalized during the year. 4. Record the journal entries on 31 December.
XYZ Company is constructing a building Construction began on January 1 and was completed on December 31. Expenditures were €2,400,000 on March 31, €1,980,000 on June 1, and €3,000,000 on December 31. The Company borrowed €1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building In addition, the company had outstanding all year an 11%, 3-year, €2,400,000 note payable and a 10%, 4-year, €4,500,000 note payable. Instructions Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during the year. 3. Total amount of interest cost to be capitalized during the year. 4. Record the journal entries on 31 December.
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 11RE
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