Vikram Splish Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of$14,500,000 on January 1, 2025. Splish expected to complete the building by December 31, 2025. Splish has the following debtobligations outstanding during the construction period.Construction loan-12% interest, payable semiannually, issued December 31, 2024Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029(a)$5,800,000Avoidable interest $4,350,0002,900,000Assume that Splish completed the office and warehouse building on December 31, 2025, as planned, at a total cost of$15,080,000, and the weighted-average amount of accumulated expenditures was $10,440,000. Compute the avoidable intereston this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0decimal places, e.g. 5,275.)

Avoidable interest is the interest cost incurred on weighted average expenditure. Capitalized…

sh Furniture Company started construction of a combination office and warehouse building for its own use at an est ,500,000 on January 1, 2025. Splish expected to complete the building by December 31, 2025. Splish has the followi gations outstanding during the construction period. Onstruction loan-12% interest, payable semiannually, issued December 31, 2024 ort-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 ng-term loan- 11% intere $5,800,000 4,350,000

sh Furniture Company started construction of a combination office and warehouse building for its own use at an est ,500,000 on January 1, 2025. Splish expected to complete the building by December 31, 2025. Splish has the followi gations outstanding during the construction period. Onstruction loan-12% interest, payable semiannually, issued December 31, 2024 ort-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 ng-term loan- 11% intere $5,800,000 4,350,000

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

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6P

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