Answered step by step
Verified Expert Solution
Question
1 Approved Answer
How is 1B wrong? Marigold Inc. is a book distributor that had been operating in its original facility since 1990. The increase in certification programs
How is 1B wrong?
Marigold Inc. is a book distributor that had been operating in its original facility since 1990. The increase in certification programs and continuing education requirements in several professions has contributed to an annual growth rate of 15% for Marigold since 2015. Marigold' original facility became obsolete by early 2020 because of the increased sales volume and the fact that Marigold now carries CDs in addition to books. On June 1, 2020, Marigold contracted with Black Construction to have a new building constructed for $4.560.000 on land owned by Marigold. The payments made by Marigold to Black Construction are shown in the schedule below. Date July 30, 2020 January 30, 2021 May 30, 2021 Total payments Amount $1,026,000 1,710,000 1.824,000 $4.560,000 Construction was completed and the building was ready for occupancy on May 27,2021. Marigold had no new borrowings directly associated with the new building but had the following debt outstanding at May 31, 2021, the end of its fiscal year. 10%, 5-year note payable of $2,280.000, dated April 1, 2017, with interest payable annually on April 1. 12%, 10-year bond issue of $3.420.000 sold at per on June 30, 2013 with interest payable annually on June 30. The new building qualifies for interest capitalization. The effect of capitalizing the interest on the new building, compared with the effect of expensing the interest is material. (a) Your answer is correct. Compute the weighted average accumulated expenditures on Marigold's new building during the capitalization period. Weighted-Average Accumulated Expenditures 1425000 Attempts: 2 of 3 used (b) * Your answer is incorrect Compute the avoidable interest on Marigold's new building(Round intermediate percentage calculation to 1 decimal place, eg. 15.6% and final answer to decimal places, e.g. 5,125.) Avoidable Interest $ $125,400Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started