Chapter 10 Workshop: Recording PP\&E ACCTG 330 Scenario JRI Corp. recently purchased land and constructed a new office building on that land. The land was purchased on February 1 and construction began on March 1 . The building was ready to use on June 1 . The initial payment of $5,616,000 was made to the construction company on March 1, as construction was beginning. Subsequent payments of $1,248,000 were made on the 1 st of each of the next 3 months, including a final payment after JRI Corp. had moved into the building and was sure there were no problems. To construct the building, JRI Corp. took out a loan of $7,000,000 with an interest rate of 5.0\%. The rest of the funds needed for construction came from JRI Corp.'s general loan of $1,750,000 with an interest rate of 8.0% or the general note for $2,625,000 with an interest rate of 5.5%. The following table lists the costs associated with the purchase and the construction calculated by the accountant before he got ill: The accountant responsible for recording the purchase of the land and the construction of the building was admitted to the hospital earlier this week with a serious infection. While the doctors expect a relatively fast recovery, he won't be back to work in time to finish the estimates for quarter end and the company needs historical costs of the land and building for the depreciation calculations. When calculating avoidable interest on the construction of the company's 5 points new asset what is the total weighted average expenditures value? What is the total avoidable interest on this construction project? 5 points What is the total historical cost (or "capitalized value") of the land? 5 points What is the total historical cost (or "capitalized value") of the constructed 5 points asset? Chapter 10 Workshop: Recording PP\&E ACCTG 330 Scenario JRI Corp. recently purchased land and constructed a new office building on that land. The land was purchased on February 1 and construction began on March 1 . The building was ready to use on June 1 . The initial payment of $5,616,000 was made to the construction company on March 1, as construction was beginning. Subsequent payments of $1,248,000 were made on the 1 st of each of the next 3 months, including a final payment after JRI Corp. had moved into the building and was sure there were no problems. To construct the building, JRI Corp. took out a loan of $7,000,000 with an interest rate of 5.0\%. The rest of the funds needed for construction came from JRI Corp.'s general loan of $1,750,000 with an interest rate of 8.0% or the general note for $2,625,000 with an interest rate of 5.5%. The following table lists the costs associated with the purchase and the construction calculated by the accountant before he got ill: The accountant responsible for recording the purchase of the land and the construction of the building was admitted to the hospital earlier this week with a serious infection. While the doctors expect a relatively fast recovery, he won't be back to work in time to finish the estimates for quarter end and the company needs historical costs of the land and building for the depreciation calculations. When calculating avoidable interest on the construction of the company's 5 points new asset what is the total weighted average expenditures value? What is the total avoidable interest on this construction project? 5 points What is the total historical cost (or "capitalized value") of the land? 5 points What is the total historical cost (or "capitalized value") of the constructed 5 points asset
