Answered: hapter : Fixed Assets On December 10,…

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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Chapter : Fixed Assets On December 10, 2018, Stella contracted with Billys Construction to have a new building constructed for $1,600,000 on land owned by Tosewarld. The payments made by Stella to Billys Construction are shown in the schedule below. See table Additional Information : Construction was completed and the building was ready for occupancy on December 31, 2019. Stella had the following debt outstanding at December 31, 2019 : 17%, 3-year note of $800,000 to finance construction of building, dated December 31, 2018, with interest payable annually on December 31 (Specific Construction Debt) 13%, 5-year note payable of $800,000, dated December 31, 2015, with interest payable annually on December 31 10%, 10-year bonds issue of $850,000, bonds issued December 31, 2014, with interest payable annually on December 31 Instructions: a. Compute the weighted-average accumulated expenditures on Stella’s new building during the capitalization period. b. Compute the avoidable interest on Stella's new building and actual interest for Stella

Date
Amount
1 January 2019
$700.000
1 May 2019
$300.000
31 December 2019 $600.000
Total Payments
$1.600.000

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