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 $1,550,000 at 7% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $9,000,000, 11% bonds $3,000,000, 7% long-term note Construction expenditures incurred during 2021 were as follows: 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%).) Date $ 680,000 1,280,000 896,000 680,000 480,000 January 1 March 31 June 30 September 30 December 31 Accumulated expenditure Average accumulated X Answer is complete but not entirely correct. Expenditure Weight 680,000 x 1,280,000x 896,000 x 680,000 x 480,000 x $ 4,016,000 Amount is 2258 000 12/12 = 9/12 = 6/12 = 3/12 = 0/12 = Interest Rate $ Average 680,000✔ 960,000 448,000 170,000 0 $ 2,258,000 Capitalized Interest < Prev 8 of Ō # Next >
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 $1,550,000 at 7% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $9,000,000, 11% bonds $3,000,000, 7% long-term note Construction expenditures incurred during 2021 were as follows: 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%).) Date $ 680,000 1,280,000 896,000 680,000 480,000 January 1 March 31 June 30 September 30 December 31 Accumulated expenditure Average accumulated X Answer is complete but not entirely correct. Expenditure Weight 680,000 x 1,280,000x 896,000 x 680,000 x 480,000 x $ 4,016,000 Amount is 2258 000 12/12 = 9/12 = 6/12 = 3/12 = 0/12 = Interest Rate $ Average 680,000✔ 960,000 448,000 170,000 0 $ 2,258,000 Capitalized Interest < Prev 8 of Ō # Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 $1,550,000 at 7% on January 1 to help finance the construction. In addition to the
construction loan, Highlands had the following debt outstanding throughout 2021:
$9,000,000, 11% bonds
$3,000,000, 7% long-term note
Construction expenditures incurred during 2021 were as follows:
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%).)
Date
$ 680,000
1,280,000
896,000
680,000
480,000
January 1
March 31
June 30
September 30
December 31
Accumulated expenditure
Average accumulated
X Answer is complete but not entirely correct.
Expenditure
Weight
$ 680,000 x
1,280,000✔ X
896,000✔ X
680,000 x
480,000 x
$ 4,016,000
Amount
Is 2 258 000
12/12
9/12
6/12
3/12
0/12
Interest Rate
=
=
=
=
=
Average
$ 680,000
960,000
448,000
170,000
0
$2,258,000
Capitalized
Interest
< Prev
8 of 10
#
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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 $1,550,000 at 7% on January 1 to help finance the construction. In addition to the
construction loan, Highlands had the following debt outstanding throughout 2021:
$9,000,000, 11% bonds
$3,000,000, 7% long-term note
Construction expenditures incurred during 2021 were as follows:
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%).)
Date
$ 680,000
1,280,000
896,000
680,000
480,000
January 1
March 31
June 30
September 30
December 31
Accumulated expenditure
Average accumulated
X Answer is complete but not entirely correct.
Expenditure
Weight
$ 680,000 x
1,280,000✔ X
896,000✔ X
680,000 x
480,000 x
$ 4,016,000
Amount
Is 2 258 000
12/12
9/12
6/12
3/12
0/12
Interest Rate
=
=
=
=
=
Average
$ 680,000
960,000
448,000
170,000
0
$2,258,000
Capitalized
Interest
< Prev
8 of 10
#
Next >

Transcribed Image Text: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%).)
Date
$ 680,000
1,280,000
896,000
680,000
480,000
January 1
March 31
June 30
September 30
December 31
Accumulated expenditure
Average accumulated
expenditures
Construction loan
Other loans (not construction)
Answer is complete but not entirely correct.
Expenditure
Weight
$ 680,000✔
896,000
680,000
480,000
$ 4,016,000
1,280,000x
Amount
33333
$ 2,258,000
✓ 1,550,000
$ 708,000
X
33
x
x
X
x
x
x
12/12
9/12 =
6/12 =
3/12 =
0/12
=
Interest Rate
7.0 %
10.8 %
BUR
=
=
=
$
Average
$
680,000
960,000
448,000✔
170,000
$ 2,258,000
$
0
Capitalized
Interest
108,500
76,464
184,964
< Prev
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#
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