Exercise 10-24 (Algo) Interest capitalization [LO10-7] On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $2,050,000 at 11% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $6,000,000, 16% bonds $4,000,000, 11% long-term note Construction expenditures incurred during 2021 were as follows: January 1 March 31 $ 840,000 1,440,000 1,088,000 840,000 640,000 June 30 September 30 December 31 Required: Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
Exercise 10-24 (Algo) Interest capitalization [LO10-7] On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $2,050,000 at 11% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $6,000,000, 16% bonds $4,000,000, 11% long-term note Construction expenditures incurred during 2021 were as follows: January 1 March 31 $ 840,000 1,440,000 1,088,000 840,000 640,000 June 30 September 30 December 31 Required: Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
I really don't know how to calculate other loans amount and interest rates. Could you show me the procedures with an explanation
Transcribed Image Text:Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the in
Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
X Answer is not complete.
Date
Expenditure
Weight
Average
January 1
$
840,000
12/12
$
840,000
%3D
March 31
1,440,000
9/12
1,080,000
%3D
June 30
1,088,000
6/12
544,000
%3D
September 30
%3D
December 31
%3D
Accumulated expenditure
$ 3,368,000
$ 2,464,000
Capitalized
Interest
Amount
Interest Rate
Average accumulated
expenditures
$ 2,464,000
Other loans (not construction)
10,000,000 X x
7.3 X %
730,000
%3D
Construction loan
$ 2,050,000
11.0 V %
225,500
X
%3D
$ 955,500
%24
![Exercise 10-24 (Algo) Interest capitalization [LO10-7]
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was
completed in 2022. The company borrowed $2,050,000 at 11% on January 1 to help finance the construction. In addition to the
construction loan, Highlands had the following debt outstanding throughout 2021:
$6,000,000, 16% bonds
$4,000,000, 11% long-term note
Construction expenditures incurred during 2021 were as follows:
$
840,000
1,440,000
1,088,000
840,000
640,000
January 1
March 31
June 30
September 30
December 31
Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations.
Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd9bed3f1-3476-41df-94aa-d1dd035d2f95%2F722b734c-356b-4014-b529-46f3154e6fee%2Fm7fycf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 10-24 (Algo) Interest capitalization [LO10-7]
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was
completed in 2022. The company borrowed $2,050,000 at 11% on January 1 to help finance the construction. In addition to the
construction loan, Highlands had the following debt outstanding throughout 2021:
$6,000,000, 16% bonds
$4,000,000, 11% long-term note
Construction expenditures incurred during 2021 were as follows:
$
840,000
1,440,000
1,088,000
840,000
640,000
January 1
March 31
June 30
September 30
December 31
Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations.
Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
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!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education