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(c) Suppose Star Development Ltd made the following payments to Topking Construction Company Inc. during 2019 - 2021: 2019 2020 2021 March 31 $250,000 $200,000
(c) Suppose Star Development Ltd made the following payments to Topking Construction Company Inc. during 2019 - 2021: 2019 2020 2021 March 31 $250,000 $200,000 June 30 $250,000 $200,000 September 30 $100,000 $250,000 $200,000 December 31 $100,000 $250,000 $200,000 In order to help finance the construction, Star issued the following instrument during 2019: $500,000 of 10-year, 9% bonds payable, issued at par on 31 March 2019, with interest payable annually on 31 March. In addition to the 9% bonds payable, the debts outstanding during 2019-2021 included the following: 1. 12%, 10-year bonds issued at par on 31 December 2013, with interest payable annually on 31 December $2,000,000 2. 9%, 5-year note payable, dated 1 January 2018, with interest payable annually on 1 January $1,000,000 Compute the amounts of each of the following (show computations): (i) Weighted-average accumulated expenditures qualifying for capitalization of interest costs for 2019 and 2020 respectively. (3 marks) (ii) Avoidable interest incurred during 2019 and 2020 respectively. (4 marks) (iii) Actual interest incurred during 2019 and 2020 respectively. (3 marks) (iv) Total amount of interest cost to be capitalized during 2019 and 2020 respectively. (2 marks)
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