Answered: the amount of interest that should be…

Business

Accounting

the amount of interest that should be capitalized by Sunland during 2020?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: The following information relates to Samson Engineering as at 30 June 2023: RProfit for the year180…

A: The objective of the question is to calculate the total non-current assets, total current assets,…

Q: The following information relates to Samson Engineering as at 30 June 2023: RProfit for the year180…

A: The objective of the question is to calculate the total non-current assets, total current assets,…

Q: Wallace Driving School's 2020 balance sheet showed net fixed assets of $5.4 million, and the 2021…

A: Net Capital Spending is the net amount the company pays to acquire the fixed assets during a…

Q: In 2020, ABC Industries, Inc. constructed a new manufacturing facility at a cost of ₱12,000,000. The…

A: IAS 23 deals with the standard on borrowing cost. As per this standard borrowing cost that are…

Q: 1. The following information is from Direct to You Corp.’s (DYC) financial records for its year…

A: Cash flow from investing activities includes sale/purchase of PPE, investments, intangible assets,…

Q: In February 2024, Cullumber Corp, began the construction of a 10-storey building. The construction…

A: Notes:The notes in accounting are the legal document that represents the loan amount which is issued…

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: Capitalized Interest: The following series of questions relate to this data set.... California…

A: Interest is a cost of debt that is paid at an interval till the debt is repaid. In the case of…

Q: On July 1, 2024, a company acquired equipment. The company paid $210,000 in cash on July 1, 2024,…

A: The note can be issued in exchange of cash while purchasing the asset. The zero interest bearing…

Q: On December 31, 2024, Sheffield Inc. borrowed $4.020,000 at 13% payable annually to finance the…

A: Journal entries act as the fundamental building blocks for solutions to those questions and others..…

Q: Capitalization of interest During 2020, Barden Building Company constructed various assets at a…

A: 1. Computation is represented as below: Hence, avoidable interest is $32,448,182. Formula Sheet:

Q: On January 1, 2021, the Shagri Company began construction on a new manufacturing facility for its…

A: Lets understand the basics.Borrowing cost incurred on the qualifying asset needs to capitalized.…

Q: Exercise 10-24 (Algo) Interest capitalization [L010-7] On January 1, 2021, the Highlands Company…

A: Expenditure×Weight=Average

Q: Alpesh

A: Calculating Interest Capitalized for 2024 (Specific Interest Method)We need to follow these steps to…

Q: E9.9 (LO 2) (Capitalization of Interest) On December 31, 2024, Main Inc. borrowed $3,000,000 at 12%…

A: expenses incurred to improve the efficacy and efficiency of the fixed assets utilized in operations…

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: 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: None

A: Year 2025:DateAmountCapitalization periodWeighted Average Accumulated ExpendituresJanuary 01,…

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: What is the noncontrolling interest in net income?

A: Non Controlling interest - Revenue $2,500,000 - Expenses $2,000,000

Q: 24, Cicero Corporation borrowed $ loan will be paid back in three equa e interest at a rate of 7%

A: Borrowed amount = $3,000,000 Rate of interest = 7% Time = 3 years Annual installment = $1,143,155

Question

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?

$0.

$42300.

$183600.

$141300.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Calculation of interest on note payable

VIEW

Calculation of amount of interest to be capitalized during 2020

VIEW

Answer

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

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…
3. 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 incremental impact of interest expense on net income from recording the proper amount of interest expense for 2021? Thank you Brenda
In 2020, ABC Industries, Inc. constructed a new manufacturing facility at a cost of ₱12,000,000. The weighted-average accumulated expenditures for 2020 were calculated to be ₱5,400,000. The company had the following debt outstanding on December 31, 2020: • 10 percent, five-year note to finance the construction of the manufacturing facility, dated January 1, 2020, ₱3,600,000. • 12 percent, 20-year bonds issued at par on April 30, 2019, ₱8,400,000. • 8 percent, six-year note payable, dated March 1, 2019, ₱1,800,000. Determine the amount of interest to be capitalized by ABC Industries for 2020.
Trump Company constructed various assets at a total cost of $8,400,000 during 2019. The weighted-average accumulated expenditures on assets qualifying for capitalization of interest during 2019 were $5,600,000. Trump had the following debts outstanding at December 31, 2019: A. 12%, ten-year bonds issued at par on December 31, 2013, with interest payable annually on December 31 $4,000,000 B. 9%, 3-year note payable, dated January 1, 2018, with interest payable annually on January 1 $2,000,000 C. 10%, 5-year note to finance the construction of various assets, dated January 1, 2019, with interest payable annually on January 1 $3,600,000 Required: Compute the amounts of each of the following. Show all workings. i. Avoidable interest. ii. Total interest to be capitalized during 2019. Explain the rationale for the decision.
Alpesh
During 2023, Blossom Company constructed various assets at a total cost of $4.10 million. The weighted- average accumulated expenditures on assets qualifying for capitalization of interest during 2023 were $2.80 million. The company had the following debts outstanding at December 31, 2023: 1. 2. 8%, five-year note to finance construction of various assets, dated January 1, 2023, with interest payable annually on January 1 $1,780,000 3. 10%, ten-year bonds issued at par on December 31, 2018, with interest payable annually on December 31 $2,040,000 7%, three-year note payable, dated January 1, 2022, with interest payable annually on January 1 $1,020,000 Calculate the total interest to be capitalized for 2023. Total interest to be capitalized
User In February 2024, Cullumber Corp, began the construction of a 10-storey building. The construction is expected to be completed by January 2025. during 2024, the following payments were made: Apr. 1: 1010000 Jun. 1: 1500000 Aug. 1: 840000 Oct. 1: 890000 No asset specific debt was incurred. During 2024, Cullumber's general debt consisted of the following: $1.8 million, 5%, 2-year note, $1.1 million, 4.5%, 2-year note, $0.50 million, 3%, 5-year note. Calculate the avoidable borrowing costs. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Sh12
Vishnu
The following information relates to Samson Engineering as at 30 June 2023: RProfit for the year180 000Drawings50 000Property920 000Long-term borrowings510 000Trade receivables380 000Plant and machinery250 000Trade payables180 000Short-term borrowings260 000Fixtures and fittings90 000Inventories420 000Equity at 1 July 20221 175 000Cash45 000Motor vehicles150 000 RequiredCalculate the following:The total non-current assets The total current assetsThe total assets
were P2,000,00C on January 1, P1,000,000 on March 31 and The construction began on January 1, 2020 and was completed on December 31, 2020. The expenditures on the construction Problem 25-2 (IFRS) On January 1, 2020, Shangrila Company borrowed P2,000,000 at an interest rate of 12% specifically for the construction of a new building. The actual interest cost on this specific borrowing was P240,000 but interest of P10,000 was earned from the temporary investment of the borrowing proceeds. Shangrila Company also had the following other loans in 2020 which were borrowed for general purposes but the proceeds were used in part for the construction of the building. 'Principal Interest 10% bank loan 3,000,000 5,000,000 300,000 600,000 12% long term loan P3,000,000 on September 30. Required: Compute the cost of the new building.
5. 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 annually March 1, 2021 an additional expenditure was made towards construction of $150,000 Interest revenue earned in 2021 $49,000 What is the correct amount of WAC for year 2? Thank you Brenda