Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Question
Chapter 11, Problem 11.5BE
To determine
The amount of interest to be capitalized during the year.
Given information:
Amount of notes payable issued is $ 2,200,000.
Time period is 2 years.
Interest rate is 8%.
Interest income earned is $3,000.
Expenditures are given for the 1st year.
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Change Entity had the following borrowing on January 1 of the current year. The borrowings were made for general purposes and the proceeds were partly used to finance the construction of a new building.10% bank loan, 2,800,000 - 280,000 annual interest10% short-term note, 1,600,000 - 160,000 annual interest12% long-term loan, 2,000,000 - 240,000 annual interestThe construction of the building was started on January 1 and was completed on December 31 of the current year. Expenditures on the building were made as follows: January 1 - 400,000; March 31 - 1,000,000; June 30 - 1,200,000; September 30 - 1,000,000; December 31 - 400,000. (Round off the capitalization rate to 3-decimal). What is the average expenditure?
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On January 1, 2023, Cake Company had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset:
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How much is the cost of the qualifying asset on initial recognition?
Chapter 11 Solutions
Intermediate Accounting (2nd Edition)
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