On January 1, 2021, Comfy Home enters into a 3-year operating gives Comfy Home the right to occupy the building for the calen due on December 31, 2021. The next payment of $42,000 is due Home's cost of capital is 10%. Date Lease Payment January 1, 2021 $ December 31, 2021 $ 40,000 December 31, 2022 $ 42,000 December 31, 2023 $ 45,000 Comfy Home's cost of capital is 10%. 15 What will be the value of the operating lease liability on Comfy Hon Round your answer to the nearest whole dollar. 16 What is the value of the ROU asset on Comfy Home's 12/31/2022 b Round your answer to the nearest whole dollar.
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- Cash Flow Amounts On January 1, 2019, Philip Holding invests 40,000 in an annuity to provide 8 equal semi-annual payments. Interest is 10%, compounded semiannually. Required: Compute the equal semiannual amounts that Philip will receive assuming that the first withdrawal is to be received on: July 1, 2019 January 1, 2019 July 1, 2022 January 1, 2024ed Help Save & Exit Subm On January 2, 2023, Brook Company acquired machinery by issuing a 5%, $324,000 note due in 5 years on December 31, 2027 Annual payments are $75,278 each December 31. The payment schedule is: Year 2023 2024 2025 2026 2027 Annual Payment $75,278 75,278 75,278 75,278 75,278 Principal Portion of Payment $59,078 62,032 65,133 68,390 69,367 Current liabilities Current portion of non-current debt Interest payable Non-current liabilities: Long-term debt Interest Portion of Payment $16,200 2023 13,246 10,145 6,888 5,911 Required: Using the information provided, complete the following liabilities section of Brook Company's balance sheet at December 31 (Leave no cells blank - be certain to enter "0" wherever required.) December 31, 2025 2024 Prev Principal Balance at Year-End $264,922 202,890 137,757 69,367 1 of 5 2026 Next >Calculating Capitalized Interest Kit Company borrows $6 million at 12% on January 1, 2019, specifically for the purpose of financing the construction of a building that is expected to take 18 months to complete. Kit invests the total amount at 11% until it makes payments for the construction project. During the first year of construction, Kit incurs the following expenditures related to this construction project: LO 10.4 SHOW ME HOW January 1 April 1 October 1 December 31 $1,000,000 1,600,000 1,200,000 500,000 Required: 1. Compute the amount of interest expense Kit would capitalize related to the construction of the building. 2. Compute the amount of interest revenue Kit would recognize. 3. Assume that Kit uses IFRS. What amount of interest would be capitalized related to the construction of the building?
- Interest Dunng Construction Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between January 1 and December 31, 2019. Snowbird made the following expenditures related to this building: April 1 $396,000 July 1 400,000 September 1 510,000 December 1 120,000 The company borrowed $500,000 at 12% to help finance the project. In addition, Snowbird had outstanding borrowings of $2 million at 8% and $1 million at 9%. Required: 1. Compute the amount of interest capitalized related to the construction of the building. Do not round your interim calculations. Round your final answer to the nearest dollar. 24 134,794 XConstruction loan-12% interest, payable semiannually, issued December 31, 2019 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 Ⓒ Whispering Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $3,000,000 on January 1, 2020. Whispering expected to complete the building by December 31, 2020. Whispering has the following debt obligations outstanding during the construction period. $1,200,000 840,000 600,000 Show Time Assume that Whispering completed the office and warehouse building on December 31, 2020, as planned at a total cost of $3.120,000, and the weighted average amount of accumulated expenditures was $2.160,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final…X company 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. i. 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 expecting to be compensated for…
- On January 1, 2021, Gundy Enterprises purchases an office building for $184,000, paying $44.000 down and borrowing the remaining $140,000signing a 7%10-year mortgageInstallment payments of $are due at the end of each monthwith the first payment due on January 31, 2021 Required: 1. Record the purchase of the building on January 12021. (no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)On January 2, 2020, Brook Company acquired machinery by issuing a 5%, $350,000 note due in 5 years on December 31, 2024. Annual payments are $81,099 each December 31. The payment schedule is: Year 2020 2021 2022 2023 2024 Annual Payment $81,099 81,099 81,099 81,099 81,099 Principal Portion of Payment $63,599 66,779 70,118 73,624 75,880 Current liabilities: Current portion of non-current debt Interest payable Non-current liabilities: Long-term debt Interest Portion of Payment $17,500 14,320 10,981 7,475 5,219 Required: Using the information provided, complete the following liabilities section of Brook Company's balance sheet at December 31: (Leave no cells blank- be certain to enter "0" wherever required.) 2020 $ $8.599 $ December 31, 2021 Principal Balance at Year-End- $286,401 219,622 149,504 75,880 0 66 2022 2023 75,880anent Attempt togress Sheridan Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $6,000,000 on January 1, 2025. Sheridan expected to complete the building by December 31, 2025. Sheridan has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2024 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2026 Long-term loan-11% interest, payable on January 1 of each year; principal payable on January 1, 2029 (a) Avoidable interest Assume that Sheridan completed the office and warehouse building on December 31, 2025, as planned, at a total cost of $6,240,000, and the weighted-average amount of accumulated expenditures was $4,320,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final…
- sIsland Solutions started construction of a new office building for its own use at an estimated cost of $5000 000 on January 1, 2022, and completed the construction on December 31, 2022.j. During the year of construction (2022) the company had outstanding the following debtobligations.i. Specific Construction Debt:$2 000 000 12% note issued December 31, 2021. Interest payable semiannuallyii. Other Debt:$1 400 000 10% short-term loan. Interest payable monthly and principal payable at maturityon May 30, 2023$1 000 000 11% long-term loan. Interest payable on January 1 of each year and principalpayable at maturity on January 1, 2025B. Total expenditures - $5 200 000C. Weighted average accumulated expenditures - $3 500 000One of the accounting interns on the other team having reviewed the statement of financial positioncommented that it just did not make any sense… this ’avoidable interest’…. In reality, isn’t all interestunavoidable …. No one lends money without expecting to be compensated…Credulous Company purchased equipment on January 1, 2020 under the following terms: The same equipment was available at a cash price of Problem 23-2 (ACP) uisitions P200,000 downpayment b. Five annual payments of P100,000, the first installment note to be paid on December 31, 2020. a. ordinary P120 per alue of P580,000. cement Required: Prepare journal entries for 2020 and 2021. 00 for alued On January 1, 2020, Enrich Company purchased a machine under the following terms: Problem 23-3 (ACP) e of ch it nal b. Four annual payments of P200,000, the first installment a. P100,000 downpayment ue note to be paid on December 31, 2020. The fair value of the machine is not clearly determinable on The prevailing rate of interest for this type of obligation is 10%. The present value factors at 10% for four periods are: is the date of acquisition. .683 3.170 Present value of 1 Present value of ordinary annuity of 1 Required: Prepare journal entries for 2020 and 2021.