Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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, $500,000; March 31, $600,000; June 30, $400,000; October 30, $600,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $700,000. The companys other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively.

What is the Interest rate on average accumulated expenditures?image text in transcribed

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%).) weight Date Expenditure Average 5 500,000 x S 12/12 500,000 January 1, 2016 600,000 x 9/12 450,000 March 31, 2016 6/12 400,000 x 200,000 June 30, 2016 2/12 600,000 x 100,000 October 30, 2016 G 2,100,000 1,250,000 Accumulated expenditure Capitalized Average Interest Rate Interest Average accumulated 1,250,000 x expenditures

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

8. Describe how cultural spaces are formed.

Answered: 1 week ago