Question
On April 1, 2028, GreenEco Corporation contracted Blue Builders to construct a new eco-friendly shopping mall for $7,000,000. GreenEco made payments for the construction as
On April 1, 2028, GreenEco Corporation contracted Blue Builders to construct a new eco-friendly shopping mall for $7,000,000. GreenEco made payments for the construction as follows: June 1, $1,400,000, August 1, $2,100,000, and December 31, $3,500,000. The construction was completed, and the shopping mall was ready for operation on December 31, 2028. GreenEco had the following outstanding debt as of December 31, 2028:
i) A 10% three-year note to finance construction of the shopping mall, dated December 31, 2027, with interest payable annually on December 31. Principal amount: $3,500,000.
ii) A 8% five-year note payable, dated December 31, 2026, with interest payable annually on December 31. Principal amount: $2,000,000.
Required:
i) Determine the amount of interest to be capitalized in 2028 in relation to the construction of the shopping mall.
ii) Prepare journal entries for GreenEco Corporation during 2028.
Step 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