Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 10, Problem 10.25E
Interest capitalization; multiple periods
• LO10–7
Thornton Industries began construction of a warehouse on July 1, 2018. The project was completed on March 31, 2019. No new loans were required to fund construction. Thornton does have the following two interest-bearing liabilities that were outstanding throughout the construction period:
$2,000,000, 8% note
$8,000,000, 4% bonds
Construction expenditures incurred were as follows:
| July 1, 2018 | $400,000 |
| September 30, 2018 | 600,000 |
| November 30, 2018 | 600,000 |
| January 30, 2019 | 540,000 |
The company’s fiscal year-end is December 31.
Required:
Calculate the amount of interest capitalized for 2018 and 2019.
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Problem 10-10 (Algo) Interest capitalization; weighted-average method [LO10-7]
On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows:
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Chapter 10 Solutions
Intermediate Accounting
Ch. 10 - Prob. 10.1QCh. 10 - Prob. 10.2QCh. 10 - Prob. 10.3QCh. 10 - Prob. 10.4QCh. 10 - Prob. 10.5QCh. 10 - Prob. 10.6QCh. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9QCh. 10 - What account is credited when a company receives...
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