XYZ Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were €2,400,000 on March 31, €1,980,000 on June 1, and €3,000,000 on December 31. The Company borrowed €1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year an 11%, 3-year, €2,400,000 note payable and a 10%, 4-year, €4,500,000 note payable. Instructions Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during the year. 3. Total amount of interest cost to be capitalized during the year. 4. Record the journal entries on 31 December.
XYZ Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were €2,400,000 on March 31, €1,980,000 on June 1, and €3,000,000 on December 31. The Company borrowed €1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year an 11%, 3-year, €2,400,000 note payable and a 10%, 4-year, €4,500,000 note payable. Instructions Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2. Avoidable interest incurred during the year. 3. Total amount of interest cost to be capitalized during the year. 4. Record the journal entries on 31 December.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:XYZ Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were €2,400,000 on March 31, €1,980,000 on June 1, and
€3,000,000 on December 31. The Company borrowed €1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had
outstanding all year an 11%, 3-year, €2,400,000 note payable and a 10%, 4-year, €4,500,000 note payable.
Instructions
Compute the amounts of each of the following (show computations):
1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost.
2. Avoidable interest incurred during the year.
3. Total amount of interest cost to be capitalized during the year.
4. Record the journal entries on 31 December.
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