Macy company had the following loans outstanding for the entire year 2017. Specific construction loan 2,000,000 10% General Loan 40,000,000 12% The entity began the self construction of a building on January 1, 2017 and the building was completed on Dec.31, 2017. The following expenditures were made during the current year. January 1 2,000,000 July 1 4,000,000 November 1 6,000,000 Total 12,000,000 Required: Compute the cost the new buildin

Macy company had the following loans outstanding for the entire year 2017. Specific construction loan 2,000,000 10% General Loan 40,000,000 12% The entity began the self construction of a building on January 1, 2017 and the building was completed on Dec.31, 2017. The following expenditures were made during the current year. January 1 2,000,000 July 1 4,000,000 November 1 6,000,000 Total 12,000,000 Required: Compute the cost the new buildin

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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Jewelry Company had the following outstanding loans during 2017 and 2018.Specific construction loan 3,600,000 10%General loan 30,000,000 12%The entity began the self-construction of a new building on January 1, 2017 and the building was completed on June 30, 2018. The following expenditures were made:January 1, 2017 4,800,000April 1, 2017 6,000,000December 1, 2017 3,600,000March 1, 2018 7,200,000Required: Compute for the cost of the building on December 31, 2017 and on June 30, 2018.
Innuendo Company had the following loans outstanding for the entire year 2021. Specific construction loan – 2,000,000 – 10% General loan – 10,000,000 – 12% The entity began the self-construction of building on January 1, 2021 and the building was completed on December 31, 2021. The following expenditures were made during the current year: January 1 - 1,000,000 July 1 - 4,000,000 November 1 - 3,000,000 Total - 8,000,000 Required: Compute the cost of the new building.
This topic is about borrowing costs. Please choose the letter of the correct answer.
Molave Company had the following outstanding loans during 2021 and 2022. Specific construction loan – 3,000,000 – 10% General loan – 25,000,000 – 12% The entity began the self-construction of a new building January 1, 2021 and the building was completed on June 30, 2022. The following expenditures were made: January 1, 2021 - 4,000,000 April 1, 2021 - 5,000,000 December 1, 2021 - 3,000,000 March 1, 2021 - 6,000,000 Required: Compute the cost of the new building on December 31, 2021 and June 30, 2022. Compute the interest expense for 2021 and 2022.
Jen Company had a 10% P3,000,000 specific construction loan and 12% P25,000,000 general loan outstanding during 2021 and 2022. The entity began the self-construction of a building on January 1, 2021 and was completed on December 31, 2022. The following expenditures were made during 2021 and 2022:January 1, 2021 4,000,000 April 1, 2021 5,000,000 December 1, 2021 3,000,000 March 1, 2022 6,000,000 1) What is the cost of the building on December 31, 2022? A. 18,000,000 B. 20,988,000 C. 19,980,000 D. 20,100,000 2) What amount of interest expense should be reported for 2022? A. 3,000,000 B. 3,300,000 C. 1,212,000 D. 912,000
Marie Company had a 10% P3,000,000 specific construction loan and 12% P25,000,000 general loan outstanding during 2021 and 2022. The entity began the self-construction of a building on January 1, 2021 and was completed on December 31, 2022. The following expenditures were made during 2021 and 2022: January 1, 2021 4,000,000April 1, 2021 5,000,000December 1, 2021 3,000,000March 1, 2022 6,000,000 1. What is the amount of interest capitalized as ost of the new building? And what is the cost of new building to date dec. 31 2021
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 $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: B 4 12% bonds Long-term note, 8% Required: Construction expenditures incurred during 2021 were as follows: January 1 March 31 June 30 September 30 December 1 $600,000 $1,200,000 $800,000 $600.000 $300,000 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.) Expenditure Average Date January 1 March 31 June 30 September 30 December 1 Avg. accumulated expenditures 5,000,000 3,000,000 Average accumulated expenditures X X X X X Amount Weight X X IIII|| Interest Rate P Capitalized Interest
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Milott Company had the following borrowings during 2017. The borrowings were made for general purposes but the proceeds were used to finance the construction of a new building.Principal Interest12% bank loan 3,900,000 468,00014% long term loan 6,500,000 910,000The construction began on January 1, 2017 and was completed on Dec. 31, 2017. Expenditures on the building were 2,600,000 on June 30 and 1,300,000 on December 31.Required: Compute the cost of the building
On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use.The building was completed in 2019. The company borrowed $1,500,000 at 8% on January 1 to help finance theconstruction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2018:$5,000,000, 12% bonds$3,000,000, 8% long-term noteConstruction expenditures incurred during 2018 were as follows:January 1 $ 600,000March 31 1,200,000June 30 800,000September 30 600,000December 31 400,000Required:Calculate the amount of interest capitalized for 2018 using the specific interest method.
On January 1, 2016, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2017. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2016: $5,000,000, 12% bonds $3,000,000, 8% long-term note Construction expenditures incurred during 2016 were as follows: January 1 March 31 $ 600,000 1,200,000 800,000 600,000 400,000 June 30 September 30 December 31 Required: Calculate the amount of interest capitalized for 2016 using the specific interest method.
Island Solutions started construction of a new office building for its own use at an estimated cost of $5 000 000 on January 1, 2022, and completed the construction on December 31, 2022. During the year of construction (2022) the company had outstanding the following debt obligations. Specific Construction Debt: $2 000 000 12% note issued December 31, 2021. Interest payable semiannually Other Debt: $1 400 000 10% short-term loan. Interest payable monthly and principal payable at maturity on May 30, 2023 $1 000 000 11% long-term loan. Interest payable on January 1 of each year and principal payable at maturity on January 1, 2025 Total expenditures - $5 200 000 Weighted average accumulated expenditures - $3 500 000 One of the accounting interns on the other team having reviewed the statement of financial position commented that it just did not make any sense… this ’avoidable interest’…. In reality, isn’t all interest unavoidable …. No one lends money without…