A:

Crane Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6300000 on March 1, $5250000 on June 1, and $7950000 on December 31. Crane Company borrowed $3150000 on January 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 8%, 3-year, $6350000 note payable and an 9%, 4-year, $11950000 note payable.

What is the weighted-average interest rate used for interest capitalization purposes?

8.50% 9.00% 8.85% 8.65%

B:

Coronado Industries traded in a manual pressing machine for an automated pressing machine and gave $44500 cash. The old machine cost $474000 and had a net book value of $339000. The old machine had a fair value of $285000.

Which of the following is the correct journal entry to record the exchange assuming commercial substance?

Equipment 329500 Equipment 285000 Cash 44500

Equipment 653500 Accumulated Depreciation 135000 Equipment 474000 Cash 44500

Cash 44500 Equipment 285000 Loss on Disposal 54000 Accumulated Depreciation 135000 Equipment 518500

Equipment 329500 Loss on Disposal 54000 Accumulated Depreciation 135000 Equipment 474000 Cash 44500