On December 31, 2024, Crane

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
Transcribed Image Text: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
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Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at Dec 31, 2025.

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