On December 31, 2024, Crane Inc. borrowed $3,060,000 at 13% payable annually to finance the construction of a new building. In2025, the company made the following expenditures related to this building: March 1, $367,200; June 1, $612,000; July 1,$1,530,000; December 1, $1,530,000. The building was completed in February 2026. Additional information is provided as follows.1.2.3.(a)Other debt outstanding:10-year, 14% bond, December 31, 2018, interest payable annually6-year, 11% note, dated December 31, 2022, interest payable annuallyMarch 1, 2025, expenditure included land costs of $153,000.Interest revenue of $49,980 earned in 2025.Determine the amount of interest to be capitalized in 2025 in relation to the construction of the building.The amount of interest $$4,080,0001,632,000ta

Capitalised costs means costs that are incurred to increase the efficiency and effectiveness of the…

Answered: On December 31, 2024, Crane

Business

Accounting

On December 31, 2024, Crane

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: net of accumulated amortization,

A: Change in accounting estimate is actually the prospective restatement of financial estimate on…

Q: On October 1, 2022, Verónica purchased a business. Of the purchase price, $192,000 is allocated to a…

A: Amortization is a way of deducting specific capital costs over a certain period of time. The concept…

Q: On January 1, 2020, Anderson Inc. has a balance in its Class 53 UCC of $390000. During 2020, assets…

A: Class 53 Capital Cost Allowance (CCA) is a tax classification used for capital assets related to…

Q: On December 10, 2020 the Elm Street project was completed and the contractor for the project…

A: Journal entries in Street improvement fund Date Particulars Debit Credit December 10 Reserve…

Q: epare the journal entry to record the cap

A: A journal entry is a basic accounting record that is used to chronologically track financial…

Q: Do not use Ai

A: This scenario involves accounting for a landfill, where the city needs to recognize closure and…

Q: On January 1, 2020, a city purchased office supplies for $103,000. During the year, $78,000 of these…

A: When we purchase supplies, we must make journal entry at their full cost.

Q: Savannah purchased a certificate of deposit for $10,000 on July 1, 2023. The certificate's maturity…

A: A Certificate of Deposit (CD) is a type of time deposit offered by banks. It has a fixed term and a…

Q: Sage Hill Ltd., follows IFRS and was organized in 2022. Sage Hill provided you with the following…

A: The objective of the question is to calculate the amount to be reported for intangible assets on the…

Q: On October 1, 2023, Verónica purchased a business. Of the purchase price, $66,000 is allocated to a…

A: Intangible assets are non-physical assets that have no inherent value and cannot be touched or seen.…

Q: Sage Hill Ltd., follows IFRS and was organized in 2022. Sage Hill provided you with the following…

A: The objective of the question is to calculate the amount to be reported for intangible assets on the…

Q: 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three…

A: Solution: % of completion = Cost incurred to Date / Total Estimated costs Gross profit for the year…

Q: BE12-2 (L01,2) Use the information provided in BE12-1. Assume that at January 1, 2019, the carrying…

A: Cost incurred in successful defense of a patent if infringed during its economic life is…

Q: A company acquires a patent for a drug with a remaining legal and useful life of six years on…

A: A patent is a form of intellectual property that gives the owner exclusive rights to make, use, and…

Q: On October 1, 2023, Kingsway Broadcasting purchased for $600,000 the copyright to publish the music…

A: Rules for EntriesPersonal Account: Related to Person or Firm.Receiver will be debited and Giver will…

Q: pany self-insures its property storm damage. d cost them $1920000 per year. The company estimates…

A: Cullumber Company insures its assets against fire and storm damage. Cullumber Company's total…

Q: 1. Pharoah purchased a patent from Vania Co. for $1,150,000 on January 1, 2023. The patent is being…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: QUESTION 1 In January, 2020, Harmony Inc. has the following expenditures related to manufacturing a…

A: Capital and Revenue ExpenditureMachineries are the most widely utilized fixed assets in industrial…

Q: Assume that Sheridan Construction Company has a non-cancellable contract to construct a $5,550,000…

A: Journal entries are made to record the transactions as the first process in the books of accounts…

Q: On January 1, 2019, Her Highness Hortense Co. purchased a patent for $1,904,000. The patent is being…

A: An intangible asset seems to be one that does not have a physical form. Intangible assets include…

Q: In 2026, the company successfully defends the patent in extended litigation at a cost of $41,600,…

A: Patents: These refer to the exclusive legal rights that are granted to a person, or organization, or…

Q: Required information [The following information applies to the questions displayed below.] In 2021,…

A: The construction cost is usually recorded in proportion to the cost actually incurred and how much…

Q: On April 1, 2025, Wildhorse Company received a condemnation award of $584,800 cash as compensation…

A: Solution:-Journal Entry:— It is an act of recording transactions in books of account when…

Q: Consider the following information from a company's records for 2020: Materials used in research and…

A: R&D expenses are typically accounted for on a company's income statement. They are considered…

Q: On May 5, 2021, Christy purchased and placed in service a hotel. The hotel cost $10.8 million.…

A: A corporation does not record any profits from the a selling transaction under the cost recovery…

Q: On January 1, 2020, the City of Hastings creates a solid waste landfill that it expects to reach…

A: Answer:- The procedure of initially recording business transactions in the books of accounts is…

Q: In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa…

A: The revenue and profit or loss can be estimated for contract on the basis of the percentage of the…

Q: Blossom's Drillers erects and places into service an off-shore oil platform on January 1, 2025, at a…

A: Approach to solving the question: In the solution below, I have used the exact same format for the…

Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

On December 31, 2024, Crane Inc. borrowed $3,060,000 at 13% payable annually to finance the construction of a new building. In
2025, the company made the following expenditures related to this building: March 1, $367,200; June 1, $612,000; July 1,
$1,530,000; December 1, $1,530,000. The building was completed in February 2026. Additional information is provided as follows.
1.
2.
3.
(a)
Other debt outstanding:
10-year, 14% bond, December 31, 2018, interest payable annually
6-year, 11% note, dated December 31, 2022, interest payable annually
March 1, 2025, expenditure included land costs of $153,000.
Interest revenue of $49,980 earned in 2025.
Determine the amount of interest to be capitalized in 2025 in relation to the construction of the building.
The amount of interest $
$4,080,000
1,632,000
ta

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Working note

VIEW

Step 2: Calculation of interest

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at Dec 31, 2025.

Solution

by Bartleby Expert

SEE SOLUTION

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Urmila
How do you prepare the depreciation for the year 2026?
At December 31, 2019, certain accounts included in the property, plant, and equipment section of Blue Spruce Corporation’s statement of financial position had the following balances: Land $309,730 Buildings—Structure 882,700 Leasehold Improvements 704,930 Equipment 844,920 During 2020, the following transactions occurred: 1. Land site No. 621 was acquired for $799,790 plus a fee of $6,780 to the real estate agent for finding the property. Costs of $33,140 were incurred to clear the land. In clearing the land, topsoil and gravel were recovered and sold for $10,950. 2. Land site No. 622, which had a building on it, was acquired for $559,950. The closing statement indicated that the land’s assessed tax value was $308,680 and the building’s value was $101,830. Shortly after acquisition, the building was demolished at a cost of $27,640. A new building was constructed for $339,530 plus the following costs: Excavation fees $37,960 Architectural design…
Examine the excerpt of a footnote from Red Sand Corporation's September 30, 2021, annual report to follow. (Click the icon to view the excerpt.) Read the requirements. 1. What are Red Sand's largest two categories of property and equipment as of September 30, 2021? Describe in general terms the types of expenditures included in these categories. Red Sand's largest category of assets is Its second largest category of assets is
Record the appropriation of $77000 of retained earnings on December 31, 2022, by Jack Inc. to establish an appropriation for bond retirement. Record the entry to establish appropriation.
On January 1, 2020, Brown Mining Enterprises purchased an existing coalmine. Brown expects to operate the mine for four years (i.e., until the end of 2023), after which it is legally required to dismantle the coalmine. Brown estimates that it will have to pay $500,000 to dismantle the mine and accomplish the other required asset retirement activities such as filling and restoring land etc. at the end of the mine’s life. The applicable general interest rate for Brown is 10% (considering its credit standing and the interest rates on its other borrowings). Prepare the journal entry to record the asset retirement obligation on January 1, 2020 and prepare the journal entries for depreciation and interest expense on december 31, 2020 2. Prepare journal entries for depreciation and interest expense on December 31, 2020.
Swifty Company incurred $551000 of research and development cost in its laboratory to develop a patent granted on January 1, 2027. On July 31, 2027, Swifty paid $83600 for legal fees in a successful defense of the patent. The total amount debited to Patents through July 31, 2027, is
15. On January 1, 2022, a company leased a land and building from an unrelated lessor for a 10- year term. The lease had a renewal option for an additional 5 years, but the entity has not reached a decision with regard to the renewal option. In early 2020, the entity completed three improvements to the property: Improvement 1 P 940,000 Improvement 2 1,500,000 360,000 Improvement 3 10 years 8 years 12 years What amount of depreciation of leasehold improvements will be reported in 2022? a. P199,228 b. P280,000 c. P311,500 d. P317,500
7
2
Kk.371.
Godo