#27

Crane Company is constructing a building. Construction began on February 1 completed on December 31. Expenditures were $1, 860,000 on March 1, $1, 260,000 on June 1, and $3, 016, 770 on December 31. Crane Company borrowed $1, 198,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2, 088,000 note payable and an 10%, 4-year, $3, 308, 700 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. Kingbird Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $390, 600. The estimated fair values of the assets are land $74, 400 building $272, 800, and equipment $99, 200. At what amounts should each of the three assets be recorded? Flounder Corp. purchased machinery for $368, 550 on May 1, 2017. It is estimated that it will have a useful life of 10 years, salvage value of $17, 550, production of 280, 800 units, and working hours of 25,000. During 2018, Flounder Corp. uses the machinery for 2, 650 hours, and the machinery produces 29, 835 unit