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Brief Exercise 10-4 Whispering Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,860,000 on March
Brief Exercise 10-4 Whispering Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,860,000 on March 1, $1,260,000 on June 1, and $3,054,900 on December 31. Whispering Company borrowed $1,128,400 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,077,200 note payable and an 11%, 4-year, $3,337,000 note payable. Compute avoidable interest for Whispering Company. Use the weighted average interest rate for interest capitalization purposes. (Round percentages to 2 decimal places, e.g. 2.51% and final answer to O decimal places, e.g. 5,275.) Avoidable interest Exercise 10-7 Skysong Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,024,000 on January 1, 2017. Skysong expected to complete the building by December 31, 2017. Skysong has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2016 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2018 Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2021 $1,990,600 1,603,500 990,300 Assume that Skysong completed the office and warehouse building on December 31, 2017, as planned at a total cost of $5,167,700, and the weighted average amount of accumulated expenditures was $3,777,200. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to O decimal places, e.g. 5,275.) Avoidable Interest Compute the depreciation expense for the year ended December 31, 2018. Skysong elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $302,800. (Round answer to 0 decimal places, e.g. 5,275.) Depreciation Expenset
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