Question
Recyclers Inc (RI) began construction of a new processing plant on January 2,2021. On this date the company completed purchase of a plot of land
Recyclers Inc (RI) began construction of a new processing plant on January 2,2021. On this date the company completed purchase of a plot of land for $ 800,000 in cash. In addition, it paid $65,000 in surveying cost and $80,000 in legal and related cost. The land was cleared of debris which had accumulated an additional cost of $14,000.
Architectural plans were commissioned on January 02 with an initial down payment of $100,000. Preliminary excavation of the foundation for the building began on February 1 based on temporary approval from the planning authority. On this date the first payment was made to the contractor of $600,000. On April 01, the plans were approved, and the final payment was made to the Architect $150,000 inclusive of building permits. The contractor received the second payment of $1,340,000 on August 01.
The building was completed and handed over to RI on November 29, when the final payment of $560,000 was made to the Contractor. RI borrowed $1,200,000 from the Bank bearing interest at 8% for 10 years to finance this project. RI also had the following debt outstanding at November 29 2021.
- 10% 5-year Bonds Payable issue of $2,000,000 dated April 1,2019 with interest paid annually at April 1.
- 8% 10-year Green Bond Payable of $5,000,000 from the Green climate fund dated September 1,2019 with interest paid annually at August 31.
The new building qualifies for interest capitalization.
Required:
Compute the balance in each of the following accounts at December 31, 2021. (Round amounts to the nearest Dollar).
- Land
- Buildings
- Interest Capitalized
d Interest expense
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