Question

BE10.1 (LO 1) Previn Brothers Inc. purchased land at a price of $27,000. Closing costs were $1,400. An old building was removed at a cost of $10,200. What amount should be recorded as the cost of the land?

BE10.2 (LO 2) Hanson Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,800,000 on March 1, $1,200,000 on June 1, and $3,000,000 on December 31. Compute Hanson’s weighted-average accumulated expenditures for interest capitalization purposes.

Answer 1

BRIEF EXERCISE 10-1

 

$27,000 + $1,400 + $10,200 = $38,600

 

 

 

 

BRIEF EXERCISE 10-2

 

Expenditures
Date		Amount		Capitalization Period		Weighted-Average Accumulated Expenditures
3/1		$1,800,000		10/12		$1,500,000
6/1		1,200,000		7/12		700,000
12/31		3,000,000		0		0
		$6,000,000				$2,200,000