Question
PLEASE ANSWER ALL PARTS FOR A THUMBS UP RATING, THANK YOU! Arlington Company is constructing a building. Construction began on January 1 and was completed
PLEASE ANSWER ALL PARTS FOR A THUMBS UP RATING, THANK YOU!
Arlington Company is constructing a building. Construction began on January 1 and was completed on December 31 of 2016. Total costs/expenditures were $4,800,000 on March 1, $3,000,000 on June 1, and $6,000,000 on December 31. Arlington Company borrowed $2,400,000 on January 1 on a 5-year, 12% note to specifically help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year, $4,800,000 note payable and an 11%, 4-year, $9,000,000 note payable.
1. What amount of interest should be charged to expense?
2. What should be the total original cost that is capitalized for the building (including all cost and capitalized interest)?
3. If the company start to use the building on 1/1/2017 and expects to use the building for 30 years with a salvage value of $500,000. Calculate the depreciation amount for 2017 under the straight-line method, double-declining balance method, and the sum of the years digits method respectively.
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