Question
In: Accounting
During 2020, Susan Building Company constructed various assets at a total cost of $12,600,000. The weighted...
During 2020, Susan Building Company constructed various assets
at a total cost of $12,600,000. The weighted average accumulated
expenditures on assets qualifying for capitalization of interest
during 2020 were $8,138,000. The company had the following debt
outstanding at December 31, 2020:
| 1. | 10%, 5-year note to finance construction of various assets, dated January 1, 2020, with interest payable annually on January 1 | $5,452,000 | ||
| 2. | 12%, ten-year bonds issued at par on December 31, 2014, with interest payable annually on December 31 | 5,946,000 | ||
| 3. | 9%, 3-year note payable, dated January 1, 2019, with interest payable annually on January 1 | 2,973,000 |
Compute the amounts of each of the following.
| 1. | Avoidable interest | $ | |
| 2. | Total interest to be capitalized during 2020 | $ |
Solutions
ekkarill92 answered 1 year agoRelated Solutions
During 2020, Maria Building Company constructed various assets at a total cost of $12,600,000. The weighted...
During 2020, Maria Building Company constructed various assets
at a total cost of $12,600,000. The weighted average accumulated
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during 2020 were $8,347,000. The company had the following debt
outstanding at December 31, 2020:
1.
10%, 5-year note to finance construction of various assets,
dated January 1, 2020, with interest payable annually on January
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2.
12%, ten-year bonds issued at par on December 31, 2014, with
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During 2020, Barden Building Company constructed various assets at a total cost of $14,700,000. The weighted...
During 2020, Barden Building Company constructed various assets
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expenditures on assets qualifying for capitalization of interest
during 2020 were $9,800,000. The company had the following debt
outstanding at December 31, 2020:
1. 10%, 5-year note to finance construction of
various assets,
dated January 1, 2020, with
interest payable annually on January
1
$6,300,000
2. 12%, ten-year bonds issued at par on December 31,
2014, with interest
payable annually...
During 2020, Barden Building Company constructed various assets at a total cost of $14,700,000. The weighted...
During 2020, Barden Building Company constructed various assets
at a total cost of $14,700,000. The weighted average accumulated
expenditures on assets qualifying for capitalization of interest
during 2020 were $9,800,000. The company had the following debt
outstanding at December 31, 2020:
1. 10%, 5-year note to finance construction of
various assets,
dated January 1, 2020, with
interest payable annually on January
1 $6,300,000
2. 12%, ten-year bonds issued at par on December 31,
2014, with interest
payable annually...
During 2018, Barden Building Company constructed various assets at a total cost of $10,500,000. The weighted...
During 2018, Barden Building Company constructed various assets
at a total cost of $10,500,000. The weighted average accumulated
expenditures (WAAE) on assets qualifying for capitalization of
interest during 2018 were $7,000,000. The company had the following
debt outstanding at December 31, 2018: • 10%, 5-year note to
finance construction of various assets, dated January 1, 2017, with
interest payable annually on January 1 $4,500,000 • 12%,
twelve-year bonds issued at par on December 31, 2009, with interest
payable annually on...
During 2020, GR Engineering Company constructed a building for its own use at a total cost...
During 2020, GR Engineering Company constructed a building for
its own use at a total cost of $14,700,000.
The weighted average accumulated expenditures on assets
qualifying for capitalization of interest during 2020 were
$10,200,000. The company had the following debt outstanding at
December 31, 2020: 1. 10%, 5-year note to finance construction of
this building, dated January 1, 2020, with interest payable
annually on January 1 $6,300,000 2. 12%, ten-year bonds issued at
par on December 31, 2014, with interest...
During 2017, Barden Building Company constructed own equipment at a total cost of $16,650,000. Date Capitalization...
During 2017, Barden Building Company constructed own equipment
at a total cost of $16,650,000.
Date
Capitalization Expenditure
Period
The weighted average accumulated
expenditures
1-Apr
$5,000,000
1-Jun
$7,000,000
31-Aug
$3,650,000
31-Dec
$1,000,000
Total
$16,650,000
The company had the following debt outstanding at December 31,
2017:
1. 10%, 5-year note to finance construction of
various assets,
dated April 1,
2017, with interest payable annually on January
1
$6,300,000
2. 13.5%, ten-year bonds issued at par on December
31, 2011, with interest...
Coronado Industries Inc. constructed a building and acquired five assets during the current year. Construction of...
Coronado Industries Inc. constructed a building and acquired
five assets during the current year.
Construction of Building: A building was
constructed on land purchased last year at a cost of $216,000.
Construction began on February 1 and was completed on November 1.
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Date
Payment
March 1
$324,000
July 1
247,500
October 1
292,500
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Coronado repaid the loan on October 1. Coronado had...
1. Han Industries Inc. constructed a building and acquired five assets during the current year. Construction...
1. Han Industries Inc. constructed a building and acquired five
assets during the current year.
Construction of Building: Han constructed a building on land
that it purchased last year at a cost of $240,000. Construction
began on March 1 and was completed on October 1. The payments to
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Date
Payment
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July 1 275,000
October 1 325,000
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Novak Company constructed a building at a cost of $2,684,000 and occupied it beginning in January...
Novak Company constructed a building at a cost of $2,684,000 and
occupied it beginning in January 1998. It was estimated at that
time that its life would be 40 years, with no salvage value.
In January 2018, a new roof was installed at a cost of $366,000,
and it was estimated then that the building would have a useful
life of 25 years from that date. The cost of the old roof was
$195,200.
1) What entry should be made...
During 2020, Vaughn Manufacturing incurred weighted-average accumulated expenditures of $1730000 during construction of assets that qualified...
During 2020, Vaughn Manufacturing incurred weighted-average
accumulated expenditures of $1730000 during construction of assets
that qualified for capitalization of interest. The only debt
outstanding during 2020 was a $2000000, 12%, 5-year note payable
dated January 1, 2020.
What is the amount of interest that should be capitalized by
Vaughn during 2020? Question 10 options: a) $240,000 b) $207,600 c)
$0 d) $32,400
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