Exercise 10-24 (Algo) Interest capitalization [LO10-7] On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,550,000 at 7% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $9,000,000, 11% bonds $3,000,000, 7% long-term note Construction expenditures incurred during 2021 were as follows: January 1 March 31 June 30 September 30 December 31 Required: Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).) Date $ 680,000 1,280,000 896,000 680,000 480,000 January 1 March 31 June 30 September 30 December 31 Accumulated expenditure Average accumulated X Answer is complete but not entirely correct. Expenditure Weight 680,000 x 1,280,000x 896,000 x 680,000 x 480,000 x $ 4,016,000 Amount is 2258 000 12/12 = 9/12 = 6/12 = 3/12 = 0/12 = Interest Rate $ Average 680,000✔ 960,000 448,000 170,000 0 $ 2,258,000 Capitalized Interest < Prev 8 of Ō # Next >

View Policies Show Attempt History Current Attempt in Progress On January 1, 2021, Vaughn Corp. purchased $1,740,000 of 6-year, 3% bonds for $1,647,994 to yield a market interest rate of 4%. Vaughn receives interest on these bonds semi-annually on July 1 and January 1. Vaughn's year end is September 30 and it intends to hold the bonds until January 1, 2027, the date the bonds mature. The bonds' trading value was $1,678,000 on September 30, 2021. (a) Your answer is correct. Record the purchase of the bonds on January 1, 2021. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1 Long-Term Investments 1,647,994 Cash 1,647,994 eTextbook and Media List of Accounts

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Current Attempt in Progress On January 2, 2018, Crane Corporation, a small company that follows ASPE, issued $1.8 million of 10% bonds at 98 due on December 31, 2027. Legal and other costs of $180,000 were incurred in connection with the issue. Crane has a policy of capitalizing and amortizing the legal and other costs incurred by including them with the bond recorded at the date of issuance. Interest on the bonds is payable each December 31. The $180,000 of issuance costs are being deferred and amortized on a straight-line basis over the 10- year term of the bonds. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (The straight-line method is not materially different in its effect compared with the effective interest method.) The bonds are callable at 102 (that is, at 102% of their face amount), and on January 2, 2023, the company called a face amount of $1,000,000 of the bonds and retired them. (a) Ignoring income taxes, calculate the…

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View Policies Current Attempt in Progress On December 31, 2023, Green Bank enters into a debt restructuring agreement with Kingbird Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $2 million to $1.9 million Extending the maturity date from December 31, 2023, to December 31, 2026 Reducing the interest rate from 10% to 8% 2₁ 3. Kingbird pays interest at the end of each year. On January 1, 2027, Kingbird pays $1.9 million in cash to Green Bank. Kingbird prepares financial statements in accordance with IFRS 9. (b) Prepare an entry at December 31, 2023, based on the results of your calculation. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.…

Need help questions 2 and 3.