Question
In 2017, Barden Building Company constructed a specialized equipment at a total cost of $14,700,000 (excluding capitalized interest). It took the entire year of 2017
In 2017, Barden Building Company constructed a specialized equipment at a total cost of $14,700,000 (excluding capitalized interest). It took the entire year of 2017 to construct the asset. The weighted average accumulated expenditures qualifying for capitalization of interest during 2017 were $9,800,000. The company had the following debt outstanding at December 31, 2017: 1. 10%, 5-year note to finance construction of specialized equipment, $6,300,000 Dated. January 1, 2017, with interest payable annually on January 1 (Construction specific loan) 2. 12%, ten-year bonds issued at par on December 31, 2011, with interest 7,000,000 payable annually on December 31 3. 9%, 3-year note payable, dated January 1, 2016, with interest payable 3,500,000 annually on January 1 Compute the amounts of each of the following (show your calculations). Avoidable interest. Total interest to be capitalized during 2017. If the equipment has a useful life of 15 years with $250,000 residual value, calculate the amount of annual depreciation on a straight-line basis.
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