Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $258,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 450,000 October 31 280,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: 1. Compute the amount of interest capitalized related to the construction of the building. 42,000 x 2. If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures 654,000 x Compute the amount of interest capitalized on the building 57 320 Y

Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $258,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 450,000 October 31 280,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: 1. Compute the amount of interest capitalized related to the construction of the building. 42,000 x 2. If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures 654,000 x Compute the amount of interest capitalized on the building 57 320 Y

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

On December 31, 2023, Cheyenne Inc., a public company, borrowed $3 million at 11% payable annually to finance the construction of a new building. In 2024, the company made the following expenditures related to this building structure: March 1, $519,000; June 1, $630,000; July 1, $1.5 million (of which $412,000 was for the roof); December 1, $1.5 million (of which $728,000 was for the building HVAC). Additional information follows: 1. 2. 3. Other debt outstanding: $5-million, 10-year, 12% bond, dated December 31, 2016, with interest payable annually $1.5-million, six-year, 10% note, dated December 31, 2020, with interest payable annually The March 1, 2024 expenditure included land costs of $147,000. Interest revenue earned in 2024 on the unused idle construction loan amounted to $52,400. Prepare the journal entry to record the capitalization of borrowing costs and the recognition of interest expense, if any, at December 31, 2024. (Credit account titles are automatically indented when…
Interest During Construction Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $252,000 (includes cost of purchasing land of $150,000) May 1 310,000 July 1 420,000 October 31 276,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: 1. Compute the amount of interest capitalized related to the construction of the building. $ X 2. If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures X Compute the amount of interest capitalized on the building $ X
H1.
The Pharm Co. self-constructed an asset for its own use. Construction started on Dec. 31, 2019. Costs incurred during the year were as follows: Jan 1- P400,000; Apr. 1 – P500,000; Aug.1 – P480,000; Dec. 1 – P180,000. The company had a two-year. 18% loan of P500,000, specifically obtained to finance the asset construction. Determine the average accumulated expenditures for the self-constructed assets and capitalized interest added to the cost of the self-constructed asset.
This topic is about borrowing costs. Please choose the letter of the correct answer.
On December 31, 2023, Cheyenne Inc., a public company, borrowed $3 million at 11% payable annually to finance the construction of a new building. In 2024, the company made the following expenditures related to this building structure: March 1, $519,000; June 1, $630,000; July 1, $1.5 million (of which $412,000 was for the roof); December 1, $1.5 million (of which $728,000 was for the building HVAC). Additional information follows: 1. 2. 3. Other debt outstanding: $5-million, 10-year, 12% bond, dated December 31, 2016, with interest payable annually $1.5-million, six-year, 10% note, dated December 31, 2020, with interest payable annually The March 1, 2024 expenditure included land costs of $147,000. Interest revenue earned in 2024 on the unused idle construction loan amounted to $52,400. Determine the interest amount that could be capitalized in 2024 in relation to the building construction. (Do not round intermediate calculations. Round capitalization rate to 2 decimal places, e.g.…
Thornton Industries began construction of a warehouse on July 1, 2024. The project was completed on March 31, 2025. No new loans were required to fund construction. Thornton does have the following two interest - bearing liabilities that were outstanding throughout the construction period:$4,000,000, 9% note$ 6,000,000, 6% bondsConstruction expenditures incurred were as follows:July 1, 2024$ 430, 000September 30, 2024630,000November 30, 2024630,000 January 30, 2025570,000 The companys fiscal year - end is December 31. Required:Calculate the amount of interest capitalized for 2024 and 2025.
Vishnu
kit Company borrows $6 million at 12% on January 1, 2019, specifically for the purpose of financing the construction of a building that is expected to take 18 montns to complete. Kit invests the total amount at 11 % until it makes payments for the construction project. During the first year of construction, kit incurs the following expenditures related to this construction project: 1. Compute the amount of interest expense Kit would capitalize related to the construction of the building. 2. Compute the amou1nt of interest revenue kit would recognize. 3. Assume that kit uses IFRS. what amount of interest would be capitalized related to the construction of the building?
Madrigal Company constructed a building for its own use. Construction started on January 3, 2021 and the building was completed on December 31, 2021. The total construction costs of P1,560,000 were incurred evenly during the construction period. The company has the following outstanding obligations prior to the start of construction.Specific borrowing ---P700,000, 16% due January 1, 2023General borrowing ---P500,000, 18% due December 31, 2024How much interest is capitalized?
Crane Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6300000 on March 1, $5340000 on June 1, and $8850000 on December 31. Crane Company. borrowed $3170000 on January 1 on a5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year $6350000 note payable and an 11%, 4-year, $12050000 note payable. What is the actual interest for Crane Company?
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 $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: B 4 12% bonds Long-term note, 8% Required: Construction expenditures incurred during 2021 were as follows: January 1 March 31 June 30 September 30 December 1 $600,000 $1,200,000 $800,000 $600.000 $300,000 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.) Expenditure Average Date January 1 March 31 June 30 September 30 December 1 Avg. accumulated expenditures 5,000,000 3,000,000 Average accumulated expenditures X X X X X Amount Weight X X IIII|| Interest Rate P Capitalized Interest