INTER. ACCOUNTING - CONNECT+ALEKS ACCESS
10th Edition
ISBN: 9781264770335
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 10.14BE
To determine
Interest Capitalization:
Interest capitalization refers to the interest amount that is added to the cost of the long-term asset. Such interest capitalization amount includes the interest amount of the debt which was financed for acquiring the asset.
To Calculate: The amount of interest capitalized for the year, using specific interest method.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A10
unc.9
Problem 6-12 Matching asset mix and financing plans (LO6-3]
Colter Steel has $5,100,000 in assets.
$ 2,200,000
Temporary current assets
Permanent current assets
1,560,000
1,340,000
$ 5,100,000
Fixed assets
Total assets
Short-term rates are 12 percent. Long-term rates are 17 percent. Earnings before interest and taxes are $1,080,000. The tax rate is 40
percent.
If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing,
what will earnings after taxes be?
Earnings after taxes
Chapter 10 Solutions
INTER. ACCOUNTING - CONNECT+ALEKS ACCESS
Ch. 10 - Prob. 10.1QCh. 10 - Prob. 10.2QCh. 10 - Prob. 10.3QCh. 10 - Prob. 10.4QCh. 10 - Prob. 10.5QCh. 10 - Prob. 10.6QCh. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9QCh. 10 - What account is credited when a company receives...
Ch. 10 - Prob. 10.11QCh. 10 - Identify the two exceptions to valuing property,...Ch. 10 - In what situations is interest capitalized?Ch. 10 - Define average accumulated expenditures and...Ch. 10 - Explain the difference between the specific...Ch. 10 - Prob. 10.16QCh. 10 - Prob. 10.17QCh. 10 - Explain the accounting treatment of costs incurred...Ch. 10 - Explain the difference in the accounting treatment...Ch. 10 - Prob. 10.20QCh. 10 - Prob. 10.21QCh. 10 - Prob. 10.22QCh. 10 - Prob. 10.23QCh. 10 - Acquisition cost; machine LO101 Beavert on Lumber...Ch. 10 - Prob. 10.2BECh. 10 - Prob. 10.3BECh. 10 - Cost of a natural resource; asset retirement...Ch. 10 - Asset retirement obligation LO101 Refer to the...Ch. 10 - Prob. 10.6BECh. 10 - Prob. 10.8BECh. 10 - Prob. 10.11BECh. 10 - Nonmonetary exchange LO106 Refer to the situation...Ch. 10 - Nonmonetary exchange LO106 Refer to the situation...Ch. 10 - Prob. 10.14BECh. 10 - Prob. 10.15BECh. 10 - Research and development LO108 Maxtor Technology...Ch. 10 - Prob. 10.18BECh. 10 - Prob. 10.19BECh. 10 - Research and development; various types LO108...Ch. 10 - Prob. 10.21BECh. 10 - Acquisition cost; equipment LO101 Oaktree Company...Ch. 10 - Prob. 10.3ECh. 10 - Prob. 10.7ECh. 10 - Prob. 10.8ECh. 10 - Acquisition costs; noninterest-bearing note ...Ch. 10 - Prob. 10.11ECh. 10 - Prob. 10.14ECh. 10 - Nonmonetary exchange LO106 [This is a variation...Ch. 10 - Prob. 10.16ECh. 10 - Nonmonetary exchange LO106 [This is a variation...Ch. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - FASB codification research LO101, LO106, LO107,...Ch. 10 - Prob. 10.30ECh. 10 - Prob. 10.31ECh. 10 - Prob. 10.32ECh. 10 - Intangibles; start-up costs LO101, LO108 Freitas...Ch. 10 - Prob. 10.1PCh. 10 - Prob. 10.4PCh. 10 - Acquisition costs; journal entries LO101, LO103,...Ch. 10 - Prob. 10.6PCh. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Judgment Case 101 Acquisition costs LO101, LO103,...Ch. 10 - Judgment Case 104 Interest capitalization LO107...Ch. 10 - Prob. 10.6DMPCh. 10 - Prob. 10.7DMPCh. 10 - Judgment Case 108 Research and development LO108...Ch. 10 - Prob. 10.9DMPCh. 10 - Prob. 10.11DMPCh. 10 - Prob. 10.13DMPCh. 10 - Prob. 10.15DMPCh. 10 - Prob. 10.16DMP
Knowledge Booster
Similar questions
- 8arrow_forward3arrow_forwardQUESTION 1 : SPECIFIC BORROWINGS On 1 January 20X1 Bakti Bhd borrowed RM1.5m to finance the production of its plant, which was expected to take a year to build. Work started during 20X1. For the first quarter of 20X1, only RM700,000 was required for the construction of the plant. The remaining RM800,000 was only required from 1 April 20X1 onwards. Hence, from 1 Iyear Jan to 31 March 20X1, Bakti invested the remaining RM800,000 temporarily to earn some interest income. The loan rate was 7% and Bakti Bhd can invest surplus funds at 3%. Required Compute the borrowing costs which may be capitalised and consequently cost of the plant as at 31 December 20X1. MERS 123arrow_forward
- Accounting Problem 10-10 (Algo) Interest capitalization; weighted-average method [LO10- 7] On January 1, 2021, the company obtained a $3 million loan with a 12% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,230,000 March 1, 2021 720,000 June 30, 2021 380,000 October 1, 2021 670,000 January 31, 2022 990,000 April 30, 2022 1,305,000 August 31, 2022 2,340,000 On January 1, 2021, the company obtained a $3 million construction loan with a 12% 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 $5,600,000 and $7,600,000 with interest rates of 8% and 10%, 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…arrow_forwardProblem 25-7 (LG 25-4) Assume an Fl originates a pool of short-term real estate loans worth $39 million with maturities of five years and paying interest rates of 7 percent (paid annually). The loans are amortized. a. What is the average payment received by the FI (both principal and interest) if no prepayment is expected over the life of the loans? b. If the loans are converted into real estate certificates and the Fl charges a 150 basis points servicing fee (including insurance), what are the payments expected by the holders of the securities, if no prepayment is expected? (For all requirements, enter your answers in dollars not in millions. Do not round intermediate calculations. Round your answers to the nearest dollar amount.) × Answer is complete but not entirely correct. Average payment $ 9,511,737 b. Average payment $ 9,369,061 (X)arrow_forwardIAS 20 On January 2, 2017, Parasail Company received a consolidated grant of P12,000,000. Three-fourths of the grant is to be utilized to purchase a college building for students from underdeveloped or developing countries. The balance of the grant is for subsidizing the tuition costs of those students for four years from the date of the grant. The building was purchased in early January and is to be depreciated using the straight line method over 10 years. The tuition costs paid amounted to P600,000 during the current year. 9. What amount of the grant is recognized as income for the year ended December 31, 2017? a. 1,200,000 b. 3,000,000 c. 1,650,000 d. 1,050,000arrow_forward
- Nonearrow_forwardCH11 Q2arrow_forward5 4 On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. • The contract calls for four rent payments of $10,500 each, payable semiannually on June 30 and December 31 each year. ⚫ The computers were acquired by ComputerWorld at a cost of $91,000 and were expected to have a useful life of five years with no residual value. ⚫ Both firms record amortization and depreciation semiannually. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease. Answer is not complete. Complete this…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
