4. 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, $580,000; March 31, $680,000; June 30, $480,000; October 30, $840,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $860,000. The companyâs other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 8% and 6%, respectively.
Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).)
Date Expenditure Weight Average January 1 ? Ã ? = ? March 31 ? Ã ? = ? June 30 ? Ã ? = ? October 30 ? Ã ? = ? Accumulated expenditures $0 $0 Average Interest Rate Capitalized Interest Average accumulated expenditures $0 ? ? ? % = $0 ? ? ? % = 0 $0
5. 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, $510,000; March 31, $610,000; June 30, $410,000; October 30, $630,000. To help finance construction, the company arranged a 8% construction loan on January 1 for $720,000. The companyâs other borrowings, outstanding for the whole year, consisted of a $2 million loan and a $4 million note with interest rates of 10% and 7%, respectively.
Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).)
Date Expenditure Weight Average January 1, 2018 ? Ã ? = ? March 31, 2018 ? Ã ? = ? June 30, 2018 ? Ã ? = ? October 30, 2018 ? Ã ? = ? Accumulated expenditures $0 $0 Average Interest Rate Capitalized Interest Average accumulated expenditures $0 Ã ? % = $0
4. 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, $580,000; March 31, $680,000; June 30, $480,000; October 30, $840,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $860,000. The companyâs other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 8% and 6%, respectively.
Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. 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, $510,000; March 31, $610,000; June 30, $410,000; October 30, $630,000. To help finance construction, the company arranged a 8% construction loan on January 1 for $720,000. The companyâs other borrowings, outstanding for the whole year, consisted of a $2 million loan and a $4 million note with interest rates of 10% and 7%, respectively.
Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e. 0.1234 should be entered as 12.34%).)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related questions
| On January 1, 2016, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2017. |
| Expenditures on the project were as follows: |
| January 1, 2016 | $ | 1,230,000 | |
| March 1, 2016 | 720,000 | ||
| June 30, 2016 | 380,000 | ||
| October 1, 2016 | 670,000 | ||
| January 31, 2017 | 990,000 | ||
| April 30, 2017 | 1,305,000 | ||
| August 31, 2017 | 2,340,000 | ||
| On January 1, 2016, the company obtained a $3 million construction loan with a 12% interest rate. The loan was outstanding all of 2016 and 2017. The companyâs 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 2016 and 2017. Interest is paid annually on all debt. The companyâs fiscal year-end is December 31. Assume the $3 million loan is not specifically tied to construction of the building. |
| Required: |
| 1. | Calculate the amount of interest that Mason should capitalize in 2016 and 2017 using the weighted-average method. (Do not round intermediate calculations. Round your answers to the nearest whole dollars.) |
| 2. | What is the total cost of the building? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) |
| 3. | Calculate the amount of interest expense that will appear in the 2016 and 2017 income statements. (Do not round intermediate calculations. Round your answers to the nearest whole dollars.) |
