Question
On january 1 2024 the mason manufactoring company began construction of a building to be used as its office headquarters. The building wascompleted on September
On january 1 2024 the mason manufactoring company began construction of a building to be used as its office headquarters. The building wascompleted on September 30, 2025. Expenditures on the project were as follows
January 1 2024 1,000,000
March 1 2024. 600,000
June 30,2024. 800,000
October 1 2024 6000,000
January 31,2025. 270,000
April 30, 2025. 585,000
August 31,2025. 900,000
On January 1, 2024, the company obtained a $3 million construction loan with a 10% Interest rate, Assume ihe $3 milion loati ls nos specifically tied to construction of the building. The loan was outstanding all of 2024 and 2025. The company's 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 roles wer outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company's fiscal year end is December 31
1.Calculate the amount of interest that mason should capitalize in 2024 and 2025 using the weighted average method
2.What is the total cost of the building?
3.Calculate the amount of interest expense that will appear in 2024
and 2025 income statements.
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Auditing ISO Management System
Authors: Dr. RAMESH R LAKHE, Dr. RAKESH L. SHRIVASTAVA, M M NAVEED, KRANTI P DHARKAR, Dr. C M SEDANI
1st Edition
1702203913, 978-1702203913
