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On January 1, 2013, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on
On January 1, 2013, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2014. Expenditures on the project were as follows: January 1, 2013 $ 1,140,000 March 1, 2013 960,000 June 30, 2013 180,000 October 1, 2013 720,000 January 31, 2014 810,000 April 30, 2014 1,125,000 August 31, 2014 1,980,000 On January 1, 2013, the company obtained a $3 million construction loan with a 12% interest rate. The loan was outstanding all of 2013 and 2014. The companys other interest-bearing debt included two long-term notes of $5,200,000 and $7,200,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2013 and 2014. Interest is paid annually on all debt. The companys fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2013 and 2014 using the weighted-average method. (Enter your answers in dollars not in millions. Round the Weighted-average rate to 2 decimal places. Round your answers to the nearest dollar amount.) 2013 2014 Interest capitalized $ $ 2. What is the total cost of the building? (Enter your answer in dollars not in millions. Round the Weighted-average rate to 2 decimal places. Round your answer to the nearest dollar amount.) Total cost of building $ 3. Calculate the amount of interest expense that will appear in the 2013 and 2014 income statements. (Enter your answers in dollars not in millions. Round the Weighted-average rate to 2 decimal places. Round your answers to the nearest dollar amount.) 2013 2014 Interest expense $ $
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