On December 31, 2024, Crane Inc. borrowed $3,060,000 at 13% payable annually to finance the construction of a new building. In2025, the company made the following expenditures related to this building: March 1, $367,200; June 1, $612,000; July 1,$1,530,000; December 1, $1,530,000. The building was completed in February 2026. Additional information is provided as follows.1.2.3.(a)Other debt outstanding:10-year, 14% bond, December 31, 2018, interest payable annually6-year, 11% note, dated December 31, 2022, interest payable annuallyMarch 1, 2025, expenditure included land costs of $153,000.Interest revenue of $49,980 earned in 2025.Determine the amount of interest to be capitalized in 2025 in relation to the construction of the building.The amount of interest $$4,080,0001,632,000ta

Capitalised costs means costs that are incurred to increase the efficiency and effectiveness of the…

Answered: On December 31, 2024, Crane

Business

Accounting

On December 31, 2024, Crane

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

On December 31, 2024, Crane Inc. borrowed $3,060,000 at 13% payable annually to finance the construction of a new building. In
2025, the company made the following expenditures related to this building: March 1, $367,200; June 1, $612,000; July 1,
$1,530,000; December 1, $1,530,000. The building was completed in February 2026. Additional information is provided as follows.
1.
2.
3.
(a)
Other debt outstanding:
10-year, 14% bond, December 31, 2018, interest payable annually
6-year, 11% note, dated December 31, 2022, interest payable annually
March 1, 2025, expenditure included land costs of $153,000.
Interest revenue of $49,980 earned in 2025.
Determine the amount of interest to be capitalized in 2025 in relation to the construction of the building.
The amount of interest $
$4,080,000
1,632,000
ta

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