On January 1, 2016, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2017.<\/p>
Expenditures on the project were as follows:<\/p>
Janurary 1, 2016 $1,000,000<\/p>
March 1, 2016 600,000<\/p>
June 30,2016 800,000<\/p>
October 1, 2016 600,000<\/p>
January 31,2017 270,000<\/p>
April 30, 2017 585,000<\/p>
August 31, 2017 900,000<\/p>
<\/p>
On January 1, 2016, the company obtained a $3,000,000 construction loan with a 10% interest rate. The loan was outstanding all of 2016 and 2017. The companys other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2016 and 2017. Interest is paid annually on all debt. The companys fiscal year-end is December 31.<\/p>
<\/p>
1.<\/strong>Calculate the amount of interest that Mason should capitalize in 2016 and 2017 using the weighted-average method.<\/p> 2.<\/strong>What is the total cost of the building?<\/p> 3.<\/strong>Calculate the amount of interest expense that will appear in the 2016 and 2017 income statements.<\/p>",
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"authors": "Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill",
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"question_posted": "2024-06-28 04:35:21",
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