the amount of interest that should be capitalized by Sunland during 2020?
Q: 1. Compute the amount of interest capitalized related to the construction of the building. 2. If the…
A: The adding of unpaid interest towards the principal sum of your loan is known as capitalization.…
Q: On January 1, 2024, the Marjlee Company began construction of an office building to be used as its…
A: As per IAS 23 "Borrowing costs", interest expense incurred for the qualifying asset needs to…
Q: Once completed, how much is capitalized in Martin's Building account? Show all your work.
A: For capitalization of interest we take avoidable interest or actual interest whichever is…
Q: Trump Company constructed various assets at a total cost of $8,400,000 during 2019. The weighted…
A: Particulars Principal Interest 9% ,3-years bond 20,00,000 1,80,000 10%,5-year bond…
Q: Thornton Industries began construction of a warehouse on July 1, 2024. The project was completed on…
A: The practice of adding unpaid interest to the main balance of a loan or investment is known as…
Q: Thornton Industries began construction of a warehouse on July 1, 2018. The project was completed on…
A:
Q: During 2020, FAITH Inc constructed assets costing P30,000,000. The weighted-average accumulated…
A: the amount of interest capitalized for 2020 Construction Loan * Rate of borrowing +…
Q: A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1,…
A: Interest expense: A charge made by lender on the amount lent to a borrower. Borrower borrows the…
Q: California Industries, Inc. borrowed $200,000 at 12% interest on January 1, 2020, for the…
A: Interest expense refers to the cost that is paid on a debt borrowed by an individual or company. The…
Q: On January 1, 2024, the company obtained a $3 million construction loan with a 11% interest rate.…
A: Calculation of Weighted Average Interest Rate Principle Amount Interest Rate Interest…
Q: Interest During Construction Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a…
A: Capitalized interest indicates the part of the interest which belongs to the capital cost of the…
Q: Which authoritative literature speaks to this topic? What is the objective of capitalizing…
A: Authoritative Literature: The authoritative literature that speaks to the topic of interest…
Q: E10-18 Calculating Capitalized Interest Kit Company borrows $6 million at 12% on January 1, 2019,…
A: As per IFRS, the interest expense on the borrowing for the qualifying assets are capitalized in the…
Q: Exercise 10-24 (Algo) Interest capitalization [L010-7] On January 1, 2021, the Highlands Company…
A: Expenditure×Weight=Average
Q: During 2021, New Era Inc. constructed assets costing $1,000,000. The weighted-average accumulated…
A: Borrowing cost means where the assets like building , take substantial time to build , then interest…
Q: On January 1, 2024, the Highlands Company began construction on a new manufacturing facility for its…
A: When interest is capitalized, the cost of building or purchasing a particular asset is included in…
Q: 7. On January 1, 2024, the Marjlee Company began construction of an office building to be used as…
A: Lets understand the basics. As per IAS 23 "Borrowing costs", interest expense incurred for the…
Q: During 2020, Hani Company incurred average accumulated expenditures of $1,000,000 during the…
A: Interest capitalized during 2020 = Face value of note x interest rate x No. of months /12
Q: CA10.3 (LO 2) (Capitalization of Interest) Vania Magazines started construction of a warehouse…
A: Avoidable interest is the interest that can be avoided if a particular project had not been taken.…
Q: these assets during 2020 was $2470000. To help pay for construction, $1710000 was borrowed at 11% on…
A: The correct answer option is $264,100 = Construction Loan × Rate of borrowing +…
Q: Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use.…
A: Amounts owed for cash borrowed are referred to as debt. The lender agrees to lend money to the…
Q: Thornton Industries began construction of a warehouse on July 1, 2018. The project was completed on…
A: Interest expense is the cost incurred for borrowing the fund. Interest is calculated on the…
Q: Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a…
A: Average Accumulated Expenditure- Weighted-average accumulated expenditure is the result of…
Q: On Dec 31, 2020 Laf borrowed $3,000,000 at 12% payable annually to finance construction of a new…
A: Interest expenditure is the cost paid by the firm against funds borrowed. It is a non-operating…
Q: 3. Hawkins Corporation began construction of a motel on March 31, 2024. The project was completed on…
A: The expense incurred by the business entities on borrowing, to acquire a long-term asset is known as…
Q: On Dec 31, 2020 Laf borrowed $3,000,000 at 12% payable annually to finance construction of a new…
A: Capitalized Interest:- This is a method where a long term loan or asset's interest amount get added…
Q: Island Solutions started construction of a new office building for its own use at an estimated cost…
A: The concept of "avoidable interest" in construction accounting refers to the interest expense that a…
Q: Thornton Industries began construction of a warehouse on July 1, 2024. The project was completed on…
A: Step 1:To calculate the amount of interest capitalized for 2024 and 2025, we need to follow the…
Q: On January 1, 2025, Waterway Co. sold equipment in exchange for an $820000 zero-interest-bearing…
A: Interest revenue is the amount of money earned by the entity on notes, bonds or debentures issued.…
Q: On Dec 31, 2020 Laf borrowed $3,000,000 at 12% payable annually to finance construction of a new…
A: Incremental Interest expense which is in addition to the interest recognised in loans related to…
Q: In 2020, ABC Industries, Inc. constructed a new manufacturing facility at a cost of ₱12,000,000. The…
A: IAS 23 deals with this the concept relating to borrowing cost. As per the IAS borrowing cost…
Q: l workings. i. Avoidable interest. ii. Total interest to be capitalized during 2019. Explain the…
A: Interest costs that could have been avoided by using a weighted average expenditure. Explanation:…
Q: Thornton Industries began construction of a warehouse on July 1, 2021. The project was completed on…
A:
Q: During 2025, Crane Company constructed assets costing $4070000. The weighted-average accumulated…
A: Capitalization of costs are considered as part of fixed assets instead of stating them as expenses…
Q: During 2023, Blossom Company constructed various assets at a total cost of $4.10 million. The…
A: It is the cost incurred towards interest payment on the funds borrowed. As per US GAAP, the…
Q: User In February 2024, Cullumber Corp, began the construction of a 10-storey building. The…
A: The objective of the question is to calculate the avoidable borrowing costs for Cullumber Corp for…
Q: Required: 1. Compute the amount of interest capitalized related to the construction of the building.…
A: Capitalized interest refers to the practice of adding interest expenses incurred during the…
Q: 4. The following information pertains to Our Company's self-constructed building project Our Company…
A: NOTE : As per BARTLEBY guidelines, when multiple sub parts are given, then first three sub parts are…
Q: Hawkins Corporation began construction of a motel on March 31, 2024. The project was completed on…
A: The borrowing cost incurred to acquire or construct the long-term or qualifying assets is…
Q: . Required:Calculate the amount of interest capitalized for 2024 and 2025.
A: An interest capitalized amount is the amount of interest which has been added to the construction…
Q: Klutlan Industries began construction of a warehouse on July 1, 2018. The project was completed on…
A: GIVEN Klutlan Industries began construction of a warchouse on July 1, 2018. The project was…
Q: On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its…
A: Capitalized interest refers to the interest component of a loan taken for developing a long-term…
Q: Interest During Construction Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a…
A: Given that Borrowed $ 1000000 @ 8% Additional debt $ 500000 @ 9% $…
Q: The following information is from Bowin Inc. for a long-term construct project that is expected to…
A: Weighted-average accumulated expenditures is used to determine the weighted average of expenditures…
Q: Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a…
A: 1. Capitalized interest-construction loan of $1,100,000:
Q10.9
During 2020, Sunland Company incurred weighted-average accumulated expenditures of $1570000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2020 was a $2040000, 9%, 5-year note payable dated January 1, 2020. What is the amount of interest that should be capitalized by Sunland during 2020?
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
- 2. On Dec 31, 2020 Laf borrowed $3,000,000 at 12% payable annually to finance construction of a new building. In 2021 the company made the following expenditures related to this building: March 1, $360,000; June 1, $600,000; July 1, $1,500,000; Dec 1, $1,500,000. The building was completed on April 30, 2022 Other debt outstanding 10 year, $4,000,000, 13% bond, December 31, 2014, interest payable annually 6 year, 10%, $1,600,000 note dated December 31,2018, interest payable March 1, 2021 an additional expenditure was made towards construction of $150,000 Interest revenue earned in 2021 $49,000 What is the weighted average interest rate of debt other than the specific borrowing loan? (Round of interest rate to nearest whole number, so if you calculated .1412 you would write 14) The firm does not need to use the WAIR rate in calculating capitalized interest in order for it to exist Thank you BrendaWeighted average accumulated expenditures are $400,000 on a project for which work steadily progressed during the current year. The following debt was outstanding during the current year. Construction loan $100,000 at 10% Note payable $500,000 at 8% Mortgage payable $150,000 at 12% a. Compute the weighted average interest rate on the general debt. Calculation of weighted average interest rate Numerator Denominator = Rate General Debt $ Debt Category 0 b. Calculate avoidable interest for the purpose of interest capitalization. Note: Use the interest rate calculated above EXACTLY as shown in your calculations below. . Note: Round dollar amounts to the nearest whole dollar. Specific Debt $ General Debt Calculation of Avoidable Interest Weighted Average $ $ Accumulated Expenditures 0 0 0 Interest Rate Avoidable 0% $ 0% LA $ Interest % 0 0 0On 4/1/22, Little Inc. borrowed funds on a 9%, one-year note to finance the construction of a new building to be used for its own purposes. Construction on the project began on 5/1/22 and was completed on 9/1/22. Rounded to the nearest whole month, how many total months in 2022 should interest be capitalized under the interest capitalization rules? 0 months 4 months 5 months 8 months 9 months 12 months
- Excelsior Corporation has the following headings on its December 31, 2019 Balance Sheet: Total Current Assets $200,000 Total Assets $500,000 Total Current Liabilities $169,000 Total Non Current Liabilities $300,000 On January 2020 Excelsior sells temporary investments to pay off $56,400 in long term debt Required 1: How much will working capital increase (decrease) by when comparing December 2019 with January 2020? Required 2: If no other transaction took place in January 2020, the current ratio at the end of January 2020 is: Required 3: If no other transaction took place in January 2020, the debt to equity ratio at the end of January 2020 is: Required 4: If no other transaction took place in January 2020, the financial leverage in January 2020 is (calculate the Equity Ratio and not the Equity Ratio percentage): Required 5: If last 12 month sales as of January 2020 amount to $480,000, the working capital turnover for the period ended January 31st 2020 is:Problem 1-10 (AICPA Adapted) Able Company had the following amounts of long-term debt outstanding on December 31, 2020: 14% note payable, due 2021 11% note payable, due 2023 8% note payable, due in 11 equal annual principal payments, plus interest beginning December 31, 2021 7% guaranteed debentures, due 2022 30,000 1,070,000 1,100,000 1,000,000 Total 3,200,000 The annual sinking fund requirement on the guaranteed debentures is P40,000 per year. What total amount should be reported as current liabilities on December 31, 2020? a. 40,000 b. 70,000 100,000 d. с. 130,000 Problem 1-11 (AICPA Adapted) Achilles Company reported the following liability balances on December 31, 2020: 12% note payable issued on March 1, 2019, maturing on March 1, 2021 10% note payable issued on October 1, 2019, maturing October 1, 2021 5,000,000 3,000,000 The 2020 financial statements were issued on March 31, 2021. On January 31, 2021, the entire P5,000,000 balance of the 12% note payable was refinanced through…Answer both subparts.if answered within 30mins,it would be helpful!! Accounting During 2018, Bar Build Company constructed various assets at a total cost of £16,800,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2018 were £11,200,000. The company had the following debt outstanding at December 31, 2018:1. 10%, 5-year note to finance construction of various assets,dated January 1, 2018, with interest payable annually on January 1 £7,200,0002. 12%, ten-year bonds issued at par on December 31, 2013, with interestpayable annually on December 31 8,000,0003. 9%, 3-year note payable, dated January 1, 2017, with interest payableannually on January 1 4,000,000InstructionsCompute the amounts of each of the following (show computations).1. Avoidable interest.2. Total interest to be capitalized during 2018.
- g. On October 1, 2023, Equipment B was acquired with a down payment of $4,000 and the remaining payments to be made in 10 annual installments of $4,000 each beginning October 1, 2024. The prevailing interest rate was 8%. Required: Supply the correct amount for each answer box on the schedule. Note: Round your intermediate calculations and final answers to the nearest whole dollar. THOMPSON CORPORATION Fixed Asset and Depreciation Schedule For Fiscal Years Ended September 30, 2023, and September 30, 2024 Assets Acquisition Date Cost Residual Depreciation Method Estimated Life in Years Depreciation for Year Ended 9/30 2023 2024 Land A 10/1/2022 $ 65,000 N/A not applicable N/A N/A N/A Building A 10/1/2022 Land B 10/2/2022 Building B Under construction Donated Equipment 10/2/2022 Equipment A 10/2/2022 747,500 $47,500 85,400 210,000 to date 16,000 99,000 N/A Straight-line not applicable 50 $ 14,000 $14,000 N/A N/A N/A Straight-line 30 0 2,000 9,000 200% Declining balance 10 3,200 2,560…Excelsior Corporation has the following headings on its December 31, 2019 Balance Sheet:Total Current Assets $200,000Total Assets $500,000Total Current Liabilities $156,500Total Non Current Liabilities $300,000On January 2020 Excelsior sells temporary investments to pay off $48,900 in long term debt Required 1: How much will working capital increase (decrease) by when comparing December 2019 with January 2020? $ Required 2: If no other transaction took place in January 2020, the current ratio at the end of January 2020 is: Required 3: If no other transaction took place in January 2020, the debt to equity ratio at the end of January 2020 is: Required 4: If no other transaction took place in January 2020, the financial leverage in January 2020 is (calculate the Equity Ratio and not the Equity Ratio percentage): Required 5: If last 12 month sales as of January 2020 amount to $480,000, the working capital turnover for the period ended January 31st 2020 is:Hawkins Corporation began construction of a motel on March 31, 2021. The project was completed on April 30, 2022. No new loans were required to fund construction. Hawkins does have the following two interest-bearing liabilities that were outstanding throughout the construction period:$5,100,000, 6% note$14,540,000, 10% bondsConstruction expenditures incurred were as follows: March 31, 2021 $ 3,910,000 June 30, 2021 5,910,000 November 30, 2021 1,782,000 February 28, 2022 2,910,000 The company’s fiscal year-end is December 31.Required:Calculate the amount of interest capitalized for 2021 and 2022. (Round weighted average interest rate to 2 decimal places and final answers to the nearest whole dollar.)
- During 2022, Churchill Inc. constructed assets costing £4,200,000. The weighted- average accumulated expenditures on these assets the year was £2,600,000. Churchill took out a 7% construction loan of £4,000,000 on January 1, 2022, and funds not needed for construction were temporarily invested in short-term securities, yielding £30,000 in interest revenue. Other than the construction loan, the only other debt outstanding during the year was a £2,000,000, 5-year, 9% note payable dated January 1, 2018. What is the amount of interest that should be capitalized by Churchill during 2022? £152,000. £182,000. £280,000. £330,000. a. b. C. d.Coal Company began constructing a building for its own use in January 2023. During 2023, Coal incurred interest of P50,000 on specific construction debt, and P20,000 on other borrowings. Interest computed on the weighted-average amount of accumulated expenditures for the building during 2023 was P40,000. What amount of interest cost should Coal capitalize? a. 20,000 b. 40,000 c. 50,000 d. 70,000On May 1, 2020, Vaughn Manufacturing began construction of a building. Expenditures of $620400 were incurred monthly for 5 months beginning on May 1. The building was completed and ready for occupancy on September 1, 2020. For the purpose of determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures on the building during 2020 were O $2481600. O $3102000. O $517000. O $620400.
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)