On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Marinissued a $270,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $169,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Marin made a final $101,000 payment to Minsk. Other than the note to Netherlands, Marin’s only outstanding liability at December 31, 2020, is a $30,100, 8%, 6-year note payable, dated January 1, 2017, on which interest is payable each December 31. (a) Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020. Interest revenue $ Weighted-average accumulated expenditures $ Avoidable interest $ Interest capitalized $ List of Accounts
On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Marinissued a $270,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $169,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Marin made a final $101,000 payment to Minsk. Other than the note to Netherlands, Marin’s only outstanding liability at December 31, 2020, is a $30,100, 8%, 6-year note payable, dated January 1, 2017, on which interest is payable each December 31. (a) Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020. Interest revenue $ Weighted-average accumulated expenditures $ Avoidable interest $ Interest capitalized $ List of Accounts
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...
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On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction begun immediately and was completed on November 1, 2020. To help finance construction, on July 31 Marinissued a $270,000, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $169,000 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Marin made a final $101,000 payment to Minsk. Other than the note to Netherlands, Marin’s only outstanding liability at December 31, 2020, is a $30,100, 8%, 6-year note payable, dated January 1, 2017, on which interest is payable each December 31.
(a)
Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2020.
| Interest revenue |
$
|
|
| Weighted-average accumulated expenditures |
$
|
|
| Avoidable interest |
$
|
|
| Interest capitalized |
$
|
List of Accounts
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