Larkspur Industries Inc. started construction of a manufacturing facility for its own use at an estimated cost of $ 12,200,000 on January 1, 2017. Larkspur expected to complete the building by December 31, 2017. Larkspur's debt, all of which was outstanding during the construction period, was as follows. Construction loan- 11% interest, payable semiannually, issued December 31, 2016; $ 6,100,000 Long-term loan #1 – 10% interest, payable on January 1 of each year. Principal payable on January 1, 2019; $ 1,830,000 Long-term loan #2– 12% interest, payable on December 31 of each year. Principal payable on December 31, 2025; $ 4,270,000 (a) Assume that Larkspur completed the facility on December 31, 2017, at a total cost of $ 12,566,000, and the weighted-average amount of accumulated expenditures was $ 8,296,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% and round final answer to 0 decimal places, e.g. 5,275.) Avoidable Interest

During 2017, Egyptian Mau Company construct building costing P18,500,000. The weighted average accumulated expenditures on the building during 2017 totaled P7,800,000. The entity borrowed P4,000,000 at 7% on January 1, 2017. Funds not needed for construction were temporarily invested in short-term securities, and earned P120,000 interest revenue. In addition to the construction loan, the entity had two other notes outstanding during the year, P3,000,000, 10-year, 10% note payable dated October 1, 2015, and a 5-year P2,000,000, 8% note payable dated November 2, 2015. What amount of interest should be capitalized on December 31, 2017? A. 574,000 B. 620,000 C. 509,600 D. 629,600

None

On January 1, 2014, Fabco borrowed $5,000,000 from First Bank of Newburg. The loan had a term of five years with the principal amount due at the end of the fifth year. Interest is at an annual rate of 6% with interest being paid semiannually on June 30 and December 31. In connection with the loan, the borrower incurred $84,438 of debt issuance costs that are to be amortized over the term of the loan. The effective interest method is to be used to account for the loan. Fabco was able to make the first two semiannual debt service payments, but then began to see a serious deterioration in its business. Fabco is currently in default on a number of debts and is unable to secure additional capital at market rates of interest. Based on projected cash flows, it is doubtful that the company will continue as a going concern. The company accrued the interest due on June 30, 2015, but is unable to make the interest payment. In an attempt to resolve these serious issues, Fabco received concessions…