QUESTION 4 - 20 marks PART A Roti Hut incorporate exchanged machinery with an appraised value of $1,755,000, a recorded cost of $2,700,000 and Accumulated Depreciation of $1,350,000 with Facey Corporation for machinery Facey owns. The machinery has an appraised value of $1,695,000, a recorded cost of $3,240,000, and Accumulated Depreciation of $1,782,000. Facey also gave Roti Hut $60,000 in the exchange. Assume depreciation has already been updated. Required: a. Prepare the entries on both companies' books assuming that the exchange had commercial substance. (6 marks) b. Prepare the entries on both companies' books assuming that the exchange lacked commercial substance. (4 marks) PART B On March 1, Paza Co, began construction of a small building. The following expenditures were incurred for construction: The building was completed and occupied on July 1. To help pay for construction $200,000 was borrowed on March 1 on a 12%, three-year note payable. The only other debt outstanding during the year was a $2,000,000,10% note issued two years ago. Required: a. Calculate the weighted-average accumulated expenditures. (4 marks) b. Calculate avoidable interest. (4 marks) c. Prepare the journal entry to record the amount of interest capitalized. (2 marks)