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On January 1, 2020, Southtree Co. began construction of a building to be used as ils The building is expected to be completed on December 31, 2020. Expenditures on this project during 2020 were as follows: January 1" $100,000 March 1" June 1" 360,000 270,000 October 31" 153,000 On Jan. 1, 2020, the company obtained a $500,000 specific construction loan with a 6% interest rate. The loan was outstanding during the entire construction period. The company's other interest-bearing debts included two long-term notes of $400,000 and $700,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during the entire construction period. Instruction: (a) Determine the amount of interest capitalized for 2020. Please show your work (i.e. WA accumulated expenditure, actual interest, WA interest rate, and avoidable interest) to support your final answer. Please round the WA interest rate to the 4th decimal place when necessary. answer: The amount of interest capitalized for 2020 is Regardless of your answer in (a), determine the amount of avoidable interest for 2020 assuming that he WA accumulated expenditure is $460,000 (other things being equal).

On January 1, 2020, Southtree Co. began construction of a building to be used as ils The building is expected to be completed on December 31, 2020. Expenditures on this project during 2020 were as follows: January 1" $100,000 March 1" June 1" 360,000 270,000 October 31" 153,000 On Jan. 1, 2020, the company obtained a $500,000 specific construction loan with a 6% interest rate. The loan was outstanding during the entire construction period. The company's other interest-bearing debts included two long-term notes of $400,000 and $700,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during the entire construction period. Instruction: (a) Determine the amount of interest capitalized for 2020. Please show your work (i.e. WA accumulated expenditure, actual interest, WA interest rate, and avoidable interest) to support your final answer. Please round the WA interest rate to the 4th decimal place when necessary. answer: The amount of interest capitalized for 2020 is Regardless of your answer in (a), determine the amount of avoidable interest for 2020 assuming that he WA accumulated expenditure is $460,000 (other things being equal).

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 1, 2020, Southtree Co. began construction of a building to be used as ils The building is expected to be completed on December 31, 2020. Expenditures on this project during 2020 were as follows: January 1" $100,000 March 1" June 1" 360,000 270,000 October 31" 153,000 On Jan. 1, 2020, the company obtained a $500,000 specific construction loan with a 6% interest rate. The loan was outstanding during the entire construction period. The company's other interest-bearing debts included two long-term notes of $400,000 and $700,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during the entire construction period. Instruction: (a) Determine the amount of interest capitalized for 2020. Please show your work (i.e. WA accumulated expenditure, actual interest, WA interest rate, and avoidable interest) to support your final answer. Please round the WA interest rate to the 4th decimal place when necessary. answer: The amount of interest capitalized for 2020 is Regardless of your answer in (a), determine the amount of avoidable interest for 2020 assuming that he WA accumulated expenditure is $460,000 (other things being equal).
Transcribed Image Text:On January 1, 2020, Southtree Co. began construction of a building to be used as ils The building is expected to be completed on December 31, 2020. Expenditures on this project during 2020 were as follows: January 1" $100,000 March 1" June 1" 360,000 270,000 October 31" 153,000 On Jan. 1, 2020, the company obtained a $500,000 specific construction loan with a 6% interest rate. The loan was outstanding during the entire construction period. The company's other interest-bearing debts included two long-term notes of $400,000 and $700,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during the entire construction period. Instruction: (a) Determine the amount of interest capitalized for 2020. Please show your work (i.e. WA accumulated expenditure, actual interest, WA interest rate, and avoidable interest) to support your final answer. Please round the WA interest rate to the 4th decimal place when necessary. answer: The amount of interest capitalized for 2020 is Regardless of your answer in (a), determine the amount of avoidable interest for 2020 assuming that he WA accumulated expenditure is $460,000 (other things being equal).
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