Question
On January 1, 2021, the Mason Manufacturing Company began oonstruction of a building to be used as its office headquarters. The building was completed on
On January 1, 2021, the Mason Manufacturing Company began oonstruction of a building to be used as its office headquarters. The building was completed on September 30, 2022. Expenditures on lhe project were as follows:
January 1, 2021
March 1, 2021
June 30, 2021 October 1, 2021 January 31 , 2022
April 30, 2022
August 31, 2022
1,820,000 1,440,000 1,840,000 1,440,000 396,000 729,000 1,026,000
On January 1, 2021, the oompany obtained a $4,400,000 oonstruction loan with a 14% interest rate. The loan was outstanding au of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $2,000,000 and $8,000,000 with Interest rates of 10% and 12%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest Is paid annually on all debt. The company's fiscal year-end is December 31 . '
lDo not round Intermediate calculations.) Required:
1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the specific interest method. Also, calculate the amount of interest expense that will appear in the 2021 and 2022 income statements
Interest Capitalized Interest Expense
2. What ls the t?tal cost of the building?
2021
2022
On January 1, 2021, the Mason Manufacturing Company began oonstruction of a building to be used as its office headquarters. The building was completed on September 30, 2022. Expenditures on lhe project were as follows:
January 1, 2021
March 1, 2021
June 30, 2021 October 1, 2021 January 31 , 2022
April 30, 2022
August 31, 2022
1,820,000 1,440,000 1,840,000 1,440,000 396,000 729,000 1,026,000
On January 1, 2021, the oompany obtained a $4,400,000 oonstruction loan with a 14% interest rate. The loan was outstanding au of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $2,000,000 and $8,000,000 with Interest rates of 10% and 12%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest Is paid annually on all debt. The company's fiscal year-end is December 31 . '
lDo not round Intermediate calculations.) Required:
1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the specific interest method. Also, calculate the amount of interest expense that will appear in the 2021 and 2022 income statements
Interest Capitalized Interest Expense
2. What ls the t?tal cost of the building?
2021
2022
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
