Interest During Construction Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 552,000 May 1 561,000 October 1 528,000 2020: March 1 1,572,000 June 30 540,000 • Amounts borrowed and outstanding: $1.7 million borrowed at 12%, specifically for the project $6 million borrowed on July 1, 2018, at 14% $16 million borrowed on January 1, 2017, at 8% Required: Note: Round all final numeric answers to two decimal places. 1. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 Capitalized interest, 2020 2. If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line dep 2020.
Interest During Construction Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 552,000 May 1 561,000 October 1 528,000 2020: March 1 1,572,000 June 30 540,000 • Amounts borrowed and outstanding: $1.7 million borrowed at 12%, specifically for the project $6 million borrowed on July 1, 2018, at 14% $16 million borrowed on January 1, 2017, at 8% Required: Note: Round all final numeric answers to two decimal places. 1. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 Capitalized interest, 2020 2. If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line dep 2020.
Chapter1: Financial Statements And Business Decisions
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Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Compute the amount of interest costs capitalized each year.
Compute straight line
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Transcribed Image Text:Interest During Construction
Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:
• Capitalization period: January 1, 2019, to June 30, 2020
• Expenditures on project:
2019:
January 1
$ 552,000
May 1
561,000
October 1
528,000
2020:
March 1
1,572,000
June 30
540,000
• Amounts borrowed and outstanding:
$1.7 million borrowed at 12%, specifically for the project
$6 million borrowed on July 1, 2018, at 14%
$16 million borrowed on January 1, 2017, at 8%
Required:
Note: Round all final numeric answers to two decimal places.
1. Compute the amount of interest costs capitalized each year.
Capitalized interest, 2019
Capitalized interest, 2020
2. If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in
2020.
%24
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