The following information is from Bowin Inc. for a long-term construction project that is expected to...
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The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January of next year. The construction project is for a building intended for the company's own use. The capital expenditure on January 1 of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year. Capital Expenditures for Current Year Actual Expenditures Date Jan. 1 Mar. 31 June 30 Nov. 30 $54,000 1,620,000 3,240,000 1,620,000 Outstanding Debt in Current Year Debt Debt Amount Interest Rate Note payable $1,800,000 8% Note payable 1,440,000 8% Bond payable 3,600,000 10% Note payable 900,000 9% Compute Interest to Capitalize and Expense Journal Entry in Year 1 Journal Entries in Year 2 C Compute Interest to Capitalize and Expense Journal Entry in Year 1 Journal Entries in Year 2 a. Compute (1) interest to be capitalized and (2) interest to be expensed, during the year. Calculation of Actual Interest Debt Debt Amount Interest rate Interest Amount Specific Debt Construction loan 0 0% 0 General Debt Note payable 0 0% $ 0 Note payable 0 0% 0 Bond payable 0 0% Note payable 0 0% 0 Total $ 0 Calculation of Weighted Average Accumulated Expenditures Expenditures Months Outstanding WA Accum. Expenditures Date January 1 0 0 $ March 31 0 0 June 30 0 0 November 30 Total 0 0 Calculation of annual interest rate used in the schedule that follows Numerator + Denominator = Interest Rate General Debt $ 0 + $ Calculation of Avoidable Interest Weighted Average Accumulated Interest Avoidable Debt Category Expenditures Rate Interest Specific Debt $ 0 0% $ General Debt 0 0 0 Total 0 $ 0 1. Capitalized Interest $ 0 2. Interest expense 0 0 0 0 0 The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January of next year. The construction project is for a building intended for the company's own use. The capital expenditure on January 1 of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year. Capital Expenditures for Current Year Actual Expenditures Date Jan. 1 Mar. 31 June 30 Nov. 30 $54,000 1,620,000 3,240,000 1,620,000 Outstanding Debt in Current Year Debt Debt Amount Interest Rate Note payable $1,800,000 8% Note payable 1,440,000 8% Bond payable 3,600,000 10% Note payable 900,000 9% Compute Interest to Capitalize and Expense Journal Entry in Year 1 Journal Entries in Year 2 C Compute Interest to Capitalize and Expense Journal Entry in Year 1 Journal Entries in Year 2 a. Compute (1) interest to be capitalized and (2) interest to be expensed, during the year. Calculation of Actual Interest Debt Debt Amount Interest rate Interest Amount Specific Debt Construction loan 0 0% 0 General Debt Note payable 0 0% $ 0 Note payable 0 0% 0 Bond payable 0 0% Note payable 0 0% 0 Total $ 0 Calculation of Weighted Average Accumulated Expenditures Expenditures Months Outstanding WA Accum. Expenditures Date January 1 0 0 $ March 31 0 0 June 30 0 0 November 30 Total 0 0 Calculation of annual interest rate used in the schedule that follows Numerator + Denominator = Interest Rate General Debt $ 0 + $ Calculation of Avoidable Interest Weighted Average Accumulated Interest Avoidable Debt Category Expenditures Rate Interest Specific Debt $ 0 0% $ General Debt 0 0 0 Total 0 $ 0 1. Capitalized Interest $ 0 2. Interest expense 0 0 0 0 0
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Related Book For
Intermediate Accounting
ISBN: 978-1118300855
10th Canadian Edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
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