INTERMEDIATE ACCOUNTING
3rd Edition
ISBN: 9780136946694
Author: GORDON
Publisher: RENT PEARS
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 11.8E
a.
To determine
Weighted average accumulated expenditure for current year.
Given Information:
Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.
Amount of 6% bond payable is $5,000,000.
Amount of 9% note payable is $1,000,000.
b.
To determine
The amount of avoidable interest and actual interest.
Given Information:
Amount of note payable is $2,800,000 with the interest of 5% and time period of 3 years.
Amount of 6% bond payable is $5,000,000.
Amount of 9% note payable is $1,000,000.
c.
To determine
The amount of interest to be capitalized and expensed during the year.
d.
To determine
To prepare: The
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
An entity had the following loans outstanding during 20X1 and 20X2.Specific construction loan, 2,000,000 - 15%General loan, 15,000,000 - 12%The entity began the self-construction of a new building on January 1, 20X1 and the building was completed on December 31, 20X2. The following expenditures were made during 20X1 and 20X2: January 1, 20X1 - 2,000,000; July 1, 20X1 - 4,000,000; November 1, 20X1 - 3,000,000; July 1, 20X2 - 1,000,000. What is the Capitalizable Borrowing cost – 20X2
Vala
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for
construction were as follows: January 1, $640,000; March 31, $740,000; June 30, $540,000; October 30, $1,020,000. The company
arranged a 9% loan on January 1 for $980,000. Assume the $980,000 loan is not specifically tied to the construction of the building.
The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest
rates of 11% and 8%, respectively.
Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year.
Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage
answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).
Date
January 1
March 31
June 30
October 30
Accumulated expenditures
Average accumulated expenditures
All loans
Other loans (not…
Chapter 11 Solutions
INTERMEDIATE ACCOUNTING
Ch. 11 - Stephen J. Cosgrove is the Former Vice President....Ch. 11 - Prob. 11.2QCh. 11 - Prob. 11.3QCh. 11 - Prob. 11.4QCh. 11 - Will the expense/capitalization choice impact...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - For a long-lived operating asset acquired by...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Prob. 11.11QCh. 11 - What is the maximum amount of interest to be...Ch. 11 - Prob. 11.13QCh. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Do firms expense all costs incurred after the...Ch. 11 - Prob. 11.17QCh. 11 - Prob. 11.18QCh. 11 - When using the double-declining balance...Ch. 11 - Prob. 11.20QCh. 11 - Will a firm recognize a loss on the income...Ch. 11 - Prob. 11.22QCh. 11 - Prob. 11.23QCh. 11 - Prob. 11.24QCh. 11 - Prob. 11.25QCh. 11 - Differentiate between a leasehold and a leasehold...Ch. 11 - Prob. 11.27QCh. 11 - Prob. 11.28QCh. 11 - Prob. 11.29QCh. 11 - Prob. 11.30QCh. 11 - Prob. 11.31QCh. 11 - Prob. 11.32QCh. 11 - Prob. 11.33QCh. 11 - Prob. 11.34QCh. 11 - Prob. 11.35QCh. 11 - Prob. 11.36QCh. 11 - Prob. 11.37QCh. 11 - Prob. 11.38QCh. 11 - Prob. 11.39QCh. 11 - Prob. 11.40QCh. 11 - In a nonmonetary exchange does a firm record the...Ch. 11 - Prob. 11.42QCh. 11 - Prob. 11.43QCh. 11 - Prob. 11.44QCh. 11 - Prob. 11.45QCh. 11 - Prob. 11.1MCCh. 11 - On January 1, Year 1, Bluebird Inc. borrowed 10...Ch. 11 - Prob. 11.3MCCh. 11 - Prob. 11.4MCCh. 11 - Prob. 11.5MCCh. 11 - Prob. 11.6MCCh. 11 - Prob. 11.7MCCh. 11 - Prob. 11.8MCCh. 11 - Determining Acquisition Cost. Haply, Inc. incurred...Ch. 11 - Determining Acquisition Cost. Tarpley, Inc....Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Prob. 11.7BECh. 11 - Prob. 11.8BECh. 11 - Depreciation, Straight-Line Method. Hermit...Ch. 11 - Prob. 11.10BECh. 11 - Prob. 11.11BECh. 11 - Prob. 11.12BECh. 11 - Prob. 11.13BECh. 11 - Derecognition Due to Abandonment. Greene Corp....Ch. 11 - Prob. 11.15BECh. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - Prob. 11.18BECh. 11 - Prob. 11.19BECh. 11 - Prob. 11.20BECh. 11 - Leasehold Improvements. At the beginning of its...Ch. 11 - Determining Acquisition Cost. St Charles Flooring...Ch. 11 - Prob. 11.2ECh. 11 - Prob. 11.3ECh. 11 - Acquiring an Asset with a Note Payable (Deferred...Ch. 11 - Prob. 11.5ECh. 11 - Prob. 11.6ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.8ECh. 11 - Prob. 11.9ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.11ECh. 11 - Expensing versus Capitalizing ExpendituresAnalysis...Ch. 11 - Depreciation Methods, Disposal. Kurtis Koal...Ch. 11 - Prob. 11.14ECh. 11 - Depreciation Methods, Partial-Year Depreciation....Ch. 11 - Prob. 11.16ECh. 11 - Depreciation Methods. Ace Manufacturing, Inc....Ch. 11 - Prob. 11.18ECh. 11 - Depreciation Methods, Partial-Year Depreciation,...Ch. 11 - Prob. 11.20ECh. 11 - Partial-Year Depreciation, Sale of Property,...Ch. 11 - Prob. 11.22ECh. 11 - Disclosure of Property, Plant, and Equipment. Use...Ch. 11 - Disclosure of Property, Plant, and Equipment,...Ch. 11 - Prob. 11.25ECh. 11 - Research and Development Activities. During the...Ch. 11 - Prob. 11.27ECh. 11 - Goodwill Computation, Acquisition of Intangibles,...Ch. 11 - Prob. 11.29ECh. 11 - Prob. 11.30ECh. 11 - Prob. 11.31ECh. 11 - Prob. 11.32ECh. 11 - Prob. 11.33ECh. 11 - Prob. 11.34ECh. 11 - Prob. 11.35ECh. 11 - Prob. 11.36ECh. 11 - Prob. 11.37ECh. 11 - Exchanges Lacking Commercial Substance, Cash...Ch. 11 - Prob. 11.39ECh. 11 - Prob. 11.40ECh. 11 - Prob. 11.41ECh. 11 - Prob. 11.42ECh. 11 - Note Payable Exchanged for a Plant Asset (Deferred...Ch. 11 - Prob. 11.2PCh. 11 - Prob. 11.3PCh. 11 - Depreciation Methods and Depreciation Schedules....Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Goodwill and Bargain Purchase Computations. The...Ch. 11 - Prob. 11.8PCh. 11 - Prob. 11.9PCh. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Judgment Case 1: Property, Plant, and Equipment:...Ch. 11 - Prob. 2JCCh. 11 - Prob. 1FSCCh. 11 - Surfing the Standards Cases Surfing the Standards...Ch. 11 - Prob. 2SSCCh. 11 - Surfing the Standards Case 3: Involuntary...Ch. 11 - Prob. 4SSCCh. 11 - Prob. 5SSCCh. 11 - Prob. 1BCCCh. 11 - Prob. 2BCC
Knowledge Booster
Similar questions
- A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $610,000; March 31, $710,000; June 30, $510,000; October 30, $930,000. The company arranged a 10% loan on January 1 for $920,000. Assume the $920,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $2 million loan and a $4 million note with interest rates of 12% and 9%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). * Answer is complete but not entirely correct. Date January 1 March 31 June 30 October 30 Accumulated expenditures Average accumulated…arrow_forwardSagararrow_forwardanswer in text form please (without image)arrow_forward
- Innuendo Company had the following loans outstanding for the entire year 2021. Specific construction loan – 2,000,000 – 10% General loan – 10,000,000 – 12% The entity began the self-construction of building on January 1, 2021 and the building was completed on December 31, 2021. The following expenditures were made during the current year: January 1 - 1,000,000 July 1 - 4,000,000 November 1 - 3,000,000 Total - 8,000,000 Required: Compute the cost of the new building.arrow_forwardanswer in text form please (without image), Note: .Every entry should have narration please Computing and Recording Interest Capitalization Bullock Company is constructing a building for its own use and has been capitalizing interest based on average expenditures on a quarterly basis since the project began last year. The following expenditures are made during the first quarter: January 1, $1,960,000; February 1, $1,785,000; and March 31, $2,555,000. Bullock had the following debts outstanding during this quarter. Debt Amount Note payable, 10%, incurred specifically to finance construction $1,120,000 Short-term note payable, 15% 1,750,000 Mortgage note payable, 8% 840,000 Answer the following questions, rounding your answers to the nearest whole number.a. Compute interest to be capitalized and interest to be expensed for this first quarter. Amount of interest to be capitalized Amount of interest to expense b. Prepare the entry to record the…arrow_forwardA company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $680,000; March 31, $780,000; June 30, $580,000; October 30, $1,140,000. To help finance construction, the company arranged a 9% construction loan on January 1 for $1,060,000. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 10% and 8%, respectively. Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Date January 1 March 31 June 30 October 30 Accumulated expenditures Average accumulated expenditures Expenditure Amount X X X Weight Interest Rate % % "1 II = = Average…arrow_forward
- Windsor Company is constructing a building Construction began on February 1 and was completed on December 31 . Expenditures were $1.980,000 on March 1.$1,320,000 on June 1 and $3,300,000 on December 31 . Windsor Company borrowed $1,100,000 on March 1 on a 5 -year, 10% note to help finance construction of the building. In addition. the company had outstanding all year a 12%,5-year, $2,200,000 note payable and an 11%,4-year, $3,850,000 note payable. Compute avoidable interest for Windsor Company. Use the weighted-average interest rate for interest capitalization purposes. Avoidable interest $ I am following the steps provided in the earlier solution but my answer and this answer don't match and my practice says both are wrong. How do I get avoidable interest?arrow_forwardOn January 1, 2018, the Divine Company took out a 12% P10 million loan to finance the construction of a building. The key dates are as follows: January 1 – Loan interest relating to the project starts to be incurredFebruary 1 – Technical site planning commencesMarch 1 – Expenditures on the project start to be incurredApril 1– Construction Work CommencesNovember 1 – Substantially all of the activities necessary to prepare the asset for its intended use are completeDecember 1 – Building brought into use What amount of interest should divine capitalize for the current year?a. 1,000,000b. 900,000c. 800,000d. 700,000 What is the solution for option C?arrow_forwardGrouper Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1.440.000 on March 1. $960.000 on June 1. and $2 400.000 on December 31 Grouper Company borrowed $800,000 on March 1 on a 5-year. 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5- year, $1,600.000 note payable and an 11%. 4-year. $2,800,000 note payable. Compute avoidable interest for Grouper Company. Use the weighted average interest rate for interest capitalization purposes.arrow_forward
- Haresharrow_forwardDhapaarrow_forwardExample ABC begins construction on a warehouse on 1/1/19 and completes on 12/31/19 Expenditures on DM, DL & MOH are as follows: 1/1/19 6/30/19 9/30/19 600,000 300,000 100,000 Debt outstanding during the construction period: 1/1/19 1/1/17 1/1/15 2 year note for Construction $500,000, 4% issued a 5 year note $200,000, 3% issued a 20 year bond payable $800,000, 6% 1. Calculation of WAAE (Weighted Average Accumulated Expenditures) 2. Calculation of Avoidable Interest WAAE interest Avoidable interest ratearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning