A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures forconstruction were as follows: January 1, $690,000; March 31, $790,000; June 30, $590,000; October 30, $1,170,000. The companyarranged a 10% loan on January 1 for $1,080,000. Assume the $1,080,000 loan is not specifically tied to the construction of thebuilding. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note withinterest rates of 12% and 6%, respectively.Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year.Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentageanswers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).DateJanuary 1March 31June 30October 30Accumulated expendituresAverage accumulated expendituresExpenditure$$Amount00WeightInterest Rate%%======$CapitalizedInterest$Average$0000

A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $690,000; March 31, $790,000; June 30, $590,000; October 30, $1,170,000. The company arranged a 10% loan on January 1 for $1,080,000. Assume the $1,080,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 12% and 6%, respectively.

A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $690,000; March 31, $790,000; June 30, $590,000; October 30, $1,170,000. The company arranged a 10% loan on January 1 for $1,080,000. Assume the $1,080,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 12% and 6%, respectively.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

1. A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows. Date Payment 1/1 $500,000 4/1 600,000 8/1 800,000 10/1 500,000 To finance construction of the building, a $850,000, 10% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $600,000 note payable, 9% annual interest, and $800,000 par value bonds, 7.5% annual interest. Determine the amount of interest to be capitalized.
Dhapa
Madrigal Company constructed a building for its own use. Construction started on January 3, 2021 and the building was completed on December 31, 2021. Costs incurred during the year were as follows: January 1-P400,000 April 1 - P500,000 August 1 - P480,000 December 1- P180,000 To help finance the construction of the building, the company obtained a two-year, 12% loan of P1,000,000. Prior to the disbursement of the loan proceeds, it was temporarily invested and earned interest income of P15,000. During the year 2021, the company has also general borrowings as follows: 10% Notes Payable, due March 1, 2023 - P1,000,000 12% Notes Payable, due Dec. 31, 2024-P1,500,000 How much interest is capitalized?
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $700,000; March 31, $800,000; June 30, $600,000; October 30, $1,200,000. The company arranged a 8% loan on January 1 for $1,100,000. Assume the $1,100,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $7 million loan and a $9 million note with interest rates of 10% and 6%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Date January 1 March 31 June 30 October 30 Expenditure Weight Average Accumulated expenditures S 0 S 0 Amount Interest Rate…
Sagar
A construction company entered into a fixed-price contract to build an office building for $18 million. Construction costs incurred during the first year were $6 million, and estimated costs to complete at the end of the year were $9 million. The company recognizes revenue over time according to percentage of completion. During the first year the company billed its customer $6 million, of which $3 million was collected before year-end. What would appear in the year-end balance sheet related to this contract? Note: Enter your answers in whole dollars and not in millions (i.e., $4 million should be entered as $4,000,000). Balance Sheet (Partial) Assets:
Domestic
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $590,000; March 31, $690,000; June 30, $490,000; October 30, $870,000. The company arranged a 8% loan on January 1 for $880,000. Assume the $880,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 12% and 7%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Date January 1 Expenditure Weight Average $ 590,000 x 12/12 = $ 590,000 March 31 690,000 x 9/12 = 517,500 June 30 490,000 x 6/12 = 245,000…
On March 1, Wenger Co. began construction of a small building. Payments of$120,000 were made monthly for three months beginning March 1. The buildingwas completed and ready for occupancy on June 1. In determining the amount ofinterest cost to be capitalized, the weighted-average accumulated expenditures area. $30,000.b. $60,000c. $120,000.d. $240,000.
Blerghe started constructing a building for its own use on January 1, 2020. Blergh provided the following information related to the construction: Outstanding loans of the Company at January 1, 2020: Interest Rate Amount of loan Interest Cost 5% P10,000,000 P 500,000 10% 20,000,000 2,000,000 Total P30,000,000 P2,500,000 Construction expenditures: July 1, 2020 7,000,000 November 31,2020 3,000,000 December 31, 2020 1,000,000 The amount of borrowing cost that should be charged to profit or loss for the period is? a. 340,142 b. 2,208,450 c. 312,375 d. 2,187,625
Bonita Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $3,960,000 on March 1, $2,640,000 on June 1, and $6,600,000 on December 31. Bonita Company borrowed $2,200,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $4,400,000 note payable and an 11%, 4-year, $7,700,000 note payable. Compute avoidable interest for Bonita Company. Use the weighted-average interest rate for interest capitalization purposes. (Round "Weighted-average interest rate" to 4 decimal places, e.g. 0.2152 and final answer to O decimal places, eg. 5,275.) Avoidable interest %24
Munabhai