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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following information is for a long-term construction project for Moses Company that is finished on December 31, 2022. Capital expenditures during 2022: Date January 1, 2022 March 1, 2022 June 30, 2022 December 31, 2022 Actual Expenditures $2,220,720 300,000 500,000 500,000 Outstanding debt in 2022: Debt Issuance Date Debt Amount Interest Rate January 1, 2022 January 1, 2022 March 1, 2020 January 1, 2015 June 30, 2021 $ 800,000 150,000 600,000 1,000,000 600,000 Construction loan 12% Note payable Note payable Bonds payable Note payable 10% 8% 13% 12%
Transcribed Image Text:The following information is for a long-term construction project for Moses Company that is finished on December 31, 2022. Capital expenditures during 2022: Date January 1, 2022 March 1, 2022 June 30, 2022 December 31, 2022 Actual Expenditures $2,220,720 300,000 500,000 500,000 Outstanding debt in 2022: Debt Issuance Date Debt Amount Interest Rate January 1, 2022 January 1, 2022 March 1, 2020 January 1, 2015 June 30, 2021 $ 800,000 150,000 600,000 1,000,000 600,000 Construction loan 12% Note payable Note payable Bonds payable Note payable 10% 8% 13% 12%
4f. Write the entry to record straight-line depreciation on the building at the end of 2023, if the building is expected to have a 25-year life. 4g. What is the point of treating interest in this manner? (i.e., what concept underlies this treatment?)
Transcribed Image Text:4f. Write the entry to record straight-line depreciation on the building at the end of 2023, if the building is expected to have a 25-year life. 4g. What is the point of treating interest in this manner? (i.e., what concept underlies this treatment?)
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