Propiem 1U-10 (Aigo) interest capitalization; weigntea-average metnoa [LUTU-/ On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 $1,110,000 930,000 250,000 710,000 765,000 On January 1, 2021, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $5,100,000 and $7,100,000 with interest rates of 7% and 9%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. 1,080,000 1,890,000 Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements. Req 1 and 3 Req 2 Complete this question by entering your answers in the tabs below. X Answer is not complete. What is the total cost of the building? ("Round "Weighted-average rate of all debt" to 2 decimal places but do not round other intermediate calculations. Round your answer to the nearest whole dollar.) Total cost of building
Propiem 1U-10 (Aigo) interest capitalization; weigntea-average metnoa [LUTU-/ On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 $1,110,000 930,000 250,000 710,000 765,000 On January 1, 2021, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $5,100,000 and $7,100,000 with interest rates of 7% and 9%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. 1,080,000 1,890,000 Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements. Req 1 and 3 Req 2 Complete this question by entering your answers in the tabs below. X Answer is not complete. What is the total cost of the building? ("Round "Weighted-average rate of all debt" to 2 decimal places but do not round other intermediate calculations. Round your answer to the nearest whole dollar.) Total cost of building
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Propiem 10-10 (Aigo) interest capitalization; weigntea-average metnoa [LUTU-/
On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building was completed on September 30,
2022. Expenditures on the project were as follows:
January 1, 2021
March 1, 2021
June 30, 2021
October 1, 2021
January 31, 2022
April 30, 2022
August 31, 2022
$1,110,000
930,000
250,000
710,000
765,000
On January 1, 2021, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not
specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing
debt included two long-term notes of $5,100,000 and $7,100,000 with interest rates of 7% and 9%, respectively. Both notes were
outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31.
1,080,000
1,890,000
Required:
1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements.
Req 1 and 3
Req 2
Complete this question by entering your answers in the tabs below.
X Answer is not complete.
What is the total cost of the building? ("Round "Weighted-average rate of all debt" to 2 decimal places but do not round other
intermediate calculations. Round your answer to the nearest whole dollar.)
Total cost of building
Transcribed Image Text:On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building was completed on September 30,
2022. Expenditures on the project were as follows:
January 1, 2021
March 1, 2021
June 30, 2021
October 1, 2021
January 31, 2022
April 30, 2022
August 31, 2022
On January 1, 2021, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not
specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing
debt included two long-term notes of $5,100,000 and $7,100,000 with interest rates of 7% and 9%, respectively. Both notes were
outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31.
Required:
1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that will appear in the 2021 and 2022 income statements.
Req 1 and 3
$1,110,000
930,000
250,000
710,000
765,000
1,080,000
1,890,000
Complete this question by entering your answers in the tabs below.
Req 2
Interest capitalized
Interest expense
$
$
Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method and
interest expense that will appear in the 2021 and 2022 income statements. ("Round "Weighted-average rate of all debt" to 2
decimal places but do not round other intermediate calculations. Round your answers to the nearest whole dollar.)
X Answer is not complete.
2021
190,750
1,135,250✔
2022
Reg 2 >
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