Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 516,000 May 1 381,000 October 1 516,000 2020: March 1 1,620,000 June 30 588,000 Amounts borrowed and outstanding: $1.5 million borrowed at 12%, specifically for the project $5 million borrowed on July 1, 2018, at 14% $10 million borrowed on January 1, 2017, at 8% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020. $ fill in the blank 3
Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 516,000 May 1 381,000 October 1 516,000 2020: March 1 1,620,000 June 30 588,000 Amounts borrowed and outstanding: $1.5 million borrowed at 12%, specifically for the project $5 million borrowed on July 1, 2018, at 14% $10 million borrowed on January 1, 2017, at 8% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020. $ fill in the blank 3
Chapter1: Financial Statements And Business Decisions
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Interest During Construction
Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:
- Capitalization period: January 1, 2019, to June 30, 2020
- Expenditures on project:
2019: January 1 $ 516,000 May 1 381,000 October 1 516,000 2020: March 1 1,620,000 June 30 588,000 - Amounts borrowed and outstanding:
$1.5 million borrowed at 12%, specifically for the project
$5 million borrowed on July 1, 2018, at 14%
$10 million borrowed on January 1, 2017, at 8%
Required:
Note: Round all final numeric answers to two decimal places.
- Compute the amount of interest costs capitalized each year.
Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 - If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line
depreciation in 2020.
$ fill in the blank 3
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