not use ai please Comprehensive Interest Capitalization ProblemOn January 1, Mondello Co. contracted with Smithfield Co. to construct a building for$699,000. The cost of the land was $20,000 and was included in the first payment.The following expenditures were incurred for construction during 2009:March 1 $ 75,000May 1July 1180,000100,000April 1June 1$ 74,000270,000The building was completed and occupied on July 31. To help pay for construction,$80,000 was borrowed on March 1 on a 10%, three-year note payable. The only otherdebt outstanding during the year was a $600,000, 15% note issued two years ago and$700,000, 11% bonds issued two years ago.(a)(b)(c)Calculate the weighted-average accumulated expenditures.Calculate the weighted average interest rate.Calculate avoidable interest.Calculate actual interest.What is the capitalized interest?Prepare the necessary journal entries.Illustrate/indicate how the interest expense and capitalized interest would berecorded in the financial statements.

The capitalization of interest expenses associated with building construction is the difficulty. The…

Answered: Comprehensive Interest Capitalization…

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

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

interest During Construction Sunfish Company is constructing a building that qualifies for interest capitalization. It is build between January 1 and December 31, 2021. Sunfish made the following expenditures related to this building: 370,000 1-May $ 1-Jun 5 410,000 1-Aug $ 1-Dec $ 500,000 130,000 The company borrowed $550,000 at 11% to help finance the project. In addition, Sunfish had outstanding borrowings of $2 million at 7% and $1 million at 8%. Required: 1 Compute the amount of interest to be capitalized related to the construction of the building. 2 Next Level: What effect does the interest capitalization have on the company's financial statements after it completes the building?
On January 1, 2018, the Divine Company took out a 12% P10 million loan to finance the construction of a building. The key dates are as follows: January 1 – Loan interest relating to the project starts to be incurredFebruary 1 – Technical site planning commencesMarch 1 – Expenditures on the project start to be incurredApril 1– Construction Work CommencesNovember 1 – Substantially all of the activities necessary to prepare the asset for its intended use are completeDecember 1 – Building brought into use What amount of interest should divine capitalize for the current year?a. 1,000,000b. 900,000c. 800,000d. 700,000 What is the solution for option C?
Interest During Construction Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between January 1 and December 31, 2019. Snowbird made the following expenditures related to this building: April 1 $396,000 July 1 400,000 September 1 510,000 December 1 120,000 The company borrowed $500,000 at 12% to help finance the project. In addition, Snowbird had outstanding borrowings of $2 million at 8% and $1 million at 9%. Required: 1. Compute the amount of interest capitalized related to the construction of the building. Do not round your interim calculations. Round your final answer to the nearest dollar. 74,750 X 2. Next Level In the current period, the capitalization of interest decreases shareholders' equity decreases depreciation expense ; in future period the effect of capitalized interest is to
What is the answer to these question I uploaded
Interest Costs During Construction Comprehensive Illustration: On November 1, 2016, Shalla Company contracted Pfeifer Construction Co. to construct a building for $1,400,000 on land costing $100,000 (purchased from the contractor and included in the first payment). Shalla made the following payments to the construction company during 2017 January 1 - $210,000 March 1 - $300,000 May 1 - $540,000 December 31- $450,000 Total: $1,500,000 Interest costs during construction: Pfeifer Construction completed the building, ready for occupancy, on December 31, 2017. Shalla had the following debt outstanding at December 31, 2017 Specific Construction Debt: 1. 15%, 3-year note to finance purchase of land and construction of the building, dated December 31, 2016 with interest payable annually on December 31 $750,000 Other Debt: 2. 10% 5-year note payable, dated December 31, 2013 with interest payable annually on December 31 $550,000 3. 12%, 10-year…
Jacob Company started construction on a building on January 1, 2020 and completed construction on December 31, 2020. Jacob had only two interest notes outstanding during the year and both of these notes were outstanding for all 12 months of 2020. The following information is available: What is the cost of the building on December 31, 2020?
E10-18 Calculating Capitalized Interest Kit Company borrows $6 million at 12% on January 1, 2019, specifically for the purpose of financing the construction of a building that is expected to take 18 months to complete. Kit invests the total amount at 11% until it makes payments for the construction project. During the first year of construction, Kit incurs the following expenditures related to this construction project: January 1 $1,000,000 April 1 $1,600,000 October 1 $1,200,000 December 31 $500,000 Required: 1. Compute the amount of interest expense Kit would capitalize related to the construction of the building. 2. Compute the amount of interest revenue Kit would recognize. 3. Assume that Kit uses IFRS. What amount of interest would be capitalized related to the construction of the building?
Interest Dunng Construction Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between January 1 and December 31, 2019. Snowbird made the following expenditures related to this building: April 1 $396,000 July 1 400,000 September 1 510,000 December 1 120,000 The company borrowed $500,000 at 12% to help finance the project. In addition, Snowbird had outstanding borrowings of $2 million at 8% and $1 million at 9%. Required: 1. Compute the amount of interest capitalized related to the construction of the building. Do not round your interim calculations. Round your final answer to the nearest dollar. 24 134,794 X
Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $258,000 (includes cost of purchasing land of $150,000) May 1 320,000 July 1 450,000 October 31 280,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: 1. Compute the amount of interest capitalized related to the construction of the building. 2. If the expenditures are assumed to have been incurred evenly throughout the year: Compute weighted average accumulated expenditures Compute the amount of interest capitalized on the building
Capitalization of Interest McPherson Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2015. McPherson expected to complete the building by December 31, 2015. McPherson has the following debt obligations outstanding during the construction period.Construction loan—12% interest, payable semiannually, issuedDecember 31, 2015 $2,000,000Short-term loan—10% interest, payable monthly, and principal payableat maturity on May 30, 2016 1,600,000Long-term loan—11% interest, payable on January 1 of eachyear. Principal payable on January 1, 2019 1,000,000(Carry all computations to two decimal places.)(a) Assume that McPherson completed the office and warehouse building on December 31, 2015, as planned at a total cost of $5,200,000, and the weighted average of accumulated expenditures was $3,800,000. Compute the avoidable interest on this project.(b) Compute the depreciation expense for the year…
Owe Subject: acounting
Capitalization of interest 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: (Hint : specific construction debt) 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 (Hint : other debt) 2. 12%, ten-year bonds issued at par on December 31, 2014, with interest payable annually on December 31 $7,000,000 3. 9%, 3-year note payable, dated January 1, 2019, with interest payable…

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Financial Accounting: The Impact on Decision Make…

Accounting

ISBN:

9781305654174

Author:

Gary A. Porter, Curtis L. Norton

Publisher:

Cengage Learning

Financial Reporting, Financial Statement Analysis…

Finance

ISBN:

9781285190907

Author:

James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:

Cengage Learning

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Financial Accounting: The Impact on Decision Make…

Accounting

ISBN:

9781305654174

Author:

Gary A. Porter, Curtis L. Norton

Publisher:

Cengage Learning

Financial Reporting, Financial Statement Analysis…

Finance

ISBN:

9781285190907

Author:

James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

SEE MORE TEXTBOOKS