Assume that Flounder completed the office and warehouse building on December 31, 2022, as planned at a total cost of€4,498,000. The following expenditures were made during the period forthis project: January 1, €865,000; April 1, €1,265,000;July 1, €1,665,000; and October 1, €560,000. Excess funds from the construction loans were invested during the period andearned €18,600 of investment income. Compute the amount of borrowing costs to be capitalized for this project. (Use interestrates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to O decimal places, e.g. 5,275.)Borrowing costs€ Flounder Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of€4,260,000 on January 1, 2022. Flounder expected to complete the building by December 31, 2022. Flounder has the following debtobligations outstanding during the construction period.Construction loan-12% interest, payable semiannually, issued December 31, 2021€1,730,000Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 20231,384,000Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2026865,000

Calculation of weighted average capitalization rate for general borrowings : Loan Interest…

Flounder Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €4,260,000 on January 1,2022. Flounder expected to complete the building by December 31, 2022. Flounder has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2021 €1,730,000 Short-term loan-10% interest, payable monthly. and principal payable at maturity on May 30, 2023 1,384,000 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2026 865,000

Flounder Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €4,260,000 on January 1,2022. Flounder expected to complete the building by December 31, 2022. Flounder has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2021 €1,730,000 Short-term loan-10% interest, payable monthly. and principal payable at maturity on May 30, 2023 1,384,000 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2026 865,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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