• Capitalization period: January 1, 2019, to June 30, 2020 • Expenditures on project: 2019: 2020: January 1 May 1 October 1 $ 540,000 537,000 600,000 March 1 June 30 • Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $7 million borrowed on July 1, 2018, at 12% $16 million borrowed on January 1, 2017, at 6% Required: 1,404,000 504,000 Note: Round all final numeric answers to two decimal places. 1. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ Capitalized interest, 2020 2. If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020. $ 3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report will report income than if it had not capitalized interest. income than if it had not capitalized interest. In future periods, the same company

• Capitalization period: January 1, 2019, to June 30, 2020 • Expenditures on project: 2019: 2020: January 1 May 1 October 1 $ 540,000 537,000 600,000 March 1 June 30 • Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $7 million borrowed on July 1, 2018, at 12% $16 million borrowed on January 1, 2017, at 6% Required: 1,404,000 504,000 Note: Round all final numeric answers to two decimal places. 1. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ Capitalized interest, 2020 2. If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020. $ 3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report will report income than if it had not capitalized interest. income than if it had not capitalized interest. In future periods, the same company

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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am.103.
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am. 85.
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Capitalized interest on Groupers financial statements?
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