Interest During ConstructionAlta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:Capitalization period: January 1, 2019, to June 30, 2020Expenditures on project:2019:January 1May 1$420,000381,000October 1552,0002020:March 1June 30Amounts borrowed and outstanding:1,428,000624,000$1.6 million borrowed at 12%, specifically for the project$4 million borrowed on July 1, 2018, at 14%$18 million borrowed on January 1, 2017, at 8%Required:Note: Round all final numeric answers to two decimal places.1. Compute the amount of interest costs capitalized each year.Capitalized interest, 2019$933,000 XCapitalized interest, 2020$ 2,052,000 X2. If it is assumed that the production complex has an animated life of years and a residual value of $0, compute the straight-line depreciation in 2020.Alpha-numeric input field115,825 X$3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report higherlowerincome than if it had not capitalized interest.income than if it had not capitalized interest. In future periods, the same company will report

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

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nterest During Construction Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 492,000 May 1 441,000 October 1 648,000 2020: March 1 1,392,000 June 30 708,000 Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $5 million borrowed on July 1, 2018, at 12% $12 million borrowed on January 1, 2017, at 6% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020. $ fill in the blank 3 Since…
Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: • Capitalization period: January 1, 2019, to June 30, 2020 • Expenditures on project: 2019: 2020: January 1 May 1 October 1 $ 540,000 537,000 600,000 March 1 June 30 Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $7 million borrowed on July 1, 2018, at 12% $16 million borrowed on January 1, 2017, at 6% Required: 1,404,000 504,000 Note: Round all final numeric answers to two decimal places. 1. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ Capitalized interest, 2020 2. If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020. $ 3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report will report income than…
Interest During Construction Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 516,000 May 1 477,000 October 1 648,000 2020: March 1 1,404,000 June 30 684,000 Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $8 million borrowed on July 1, 2018, at 12% $13 million borrowed on January 1, 2017, at 6% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2020. $ fill in the blank 3 Since GAAP…
Interest During Construction Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 624,000 May 1 501,000 October 1 612,000 2020: March 1 1,596,000 June 30 660,000 Amounts borrowed and outstanding:   $1.5 million borrowed at 12%, specifically for the project   $8 million borrowed on July 1, 2018, at 14%   $14 million borrowed on January 1, 2017, at 8% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019    Capitalized interest, 2020 If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020. __________ Since GAAP requires accrual…
Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 456,000 May 1 417,000 October 1 648,000 2020: March 1 1,512,000 June 30 708,000 Amounts borrowed and outstanding:   $1.7 million borrowed at 10%, specifically for the project   $7 million borrowed on July 1, 2018, at 12%   $14 million borrowed on January 1, 2017, at 6% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $___________________ Capitalized interest, 2020 $___________________ If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2020. $________________
Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 504,000 May 1 405,000 October 1 504,000 2020: March 1 1,392,000 June 30 540,000 Amounts borrowed and outstanding:   $1.6 million borrowed at 10%, specifically for the project   $6 million borrowed on July 1, 2018, at 12%   $13 million borrowed on January 1, 2017, at 6% Instructions: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2020. $ fill in the blank 3
Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2019, to June 30, 2020 Expenditures on project: 2019: January 1 $ 456,000 May 1 489,000 October 1 588,000 2020: March 1 1,572,000 June 30 552,000 Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $6 million borrowed on July 1, 2018, at 12% $10 million borrowed on January 1, 2017, at 6% Required: Note: Round all final numeric answers to two decimal places. Compute the amount of interest costs capitalized each year. Capitalized interest, 2019 $ fill in the blank 1 Capitalized interest, 2020 $ fill in the blank 2 If it is assumed that the production complex has an estimated life of 20 years and a residual value of $0, compute the straight-line depreciation in 2020. $ fill in the blank 3
solve both a and b Acruni Co. had the following loans in place at the beginning of 2019. 1 January 2019 GHC m10% Bank loan repayable 2020 1209.5% Bank loan repayable 2021 808.9% debenture repayable 2024 100On 1 January 2019, Acruni Co began construction of a qualifying asset, a piece of machinery for a hydroelectric plant, using existing borrowings. Expenditure drawndown for the construction was GHc30 million on 1 January 2019, and GHc20million on 1 October 2019. Surplus funds were invested temporarily at a rate of 2%. Requireda) Calculate the borrowing costs that can be capitalized for the piece ofmachinery. b) Compute the cost of the machinery that will be reported in the statementof financial position as at December ,2019
Interest During Construction Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1,2019 to june 30,2020 Expenditures on project: Amounts borrowed and outstanding $1.5 million borrowed at 12% specifically for the project $6 million borrowed on July 1, 2015 at 14% $14 million borrowed on January 1,2014, at 8% Required : 1. Compute the amount of intrest costs capitalized each year 2. If it is assumed tha the production complex has an extimated life of 20years and a residual value of $0, Compute the straight - line depreciation in 2020 3. Next Level Explain the effects of the interest capitalization on the financial statements for both years ignore income taxes.
A company buys a Platform for $800,000 on January 1, 2019. The e of the rig is 10 years and the expected cost to domande the platform at the end of 10 years is $200,000 (present value at 10% is $77,110) 10% is an appropriate interest rate for this company What journal entry related to endronmental abilly should be recorded on January 1, 2019, as a result of these events? OA Debit Environmental Expense for $200,000 and credit Environmental Liability for $200,000 OB. Debit Environmental Loss for $200,000 and credit Environmental Liability for $200,000. OC. Debit Platform for $200,000 and credit Environmental Liability for $200,000 OD. Debit Platform for $77,110 and credit Environmental Liability for $77,110
Amortizing Software Development Costs During 2020, the E-Software Company capitalized computer software costs in the amount of $4,400,000. During 2020, the first year the product is released to sell, sales total $2,200,000. Estimated future sales for the remaining three-year life (through 2023) of the product are $15,400,000. Record the amount of amortization of capitalized computer development software costs for 2020. Date Account Name Dr. Cr. Dec. 31, 2020 AnswerCashNote ReceivableDiscount on Note ReceivableEquipmentAccumulated DepreciationFranchiseGoodwillPatentSoftware Intangible AssetTrademarkNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockSales RevenueAmortization ExpenseLegal ExpenseOrganization ExpenseResearch and Development ExpenseSoftware Amortization ExpenseSoftware Development ExpenseGain on saleImpairment LossN/A Answer Answer AnswerCashNote ReceivableDiscount on Note ReceivableEquipmentAccumulated…
Interest During Construction Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between January 1 and December 31, 2019. Snowbird made the following expenditures related to this building: April 1 $396,000 July 1 400,000 September 1 510,000 December 1 120,000 The company borrowed $500,000 at 12% to help finance the project. In addition, Snowbird had outstanding borrowings of $2 million at 8% and $1 million at 9%. Required: 1. Compute the amount of interest capitalized related to the construction of the building. Do not round your interim calculations. Round your final answer to the nearest dollar. 74,750 X 2. Next Level In the current period, the capitalization of interest decreases shareholders' equity decreases depreciation expense ; in future period the effect of capitalized interest is to

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