3 Real World Analysis A steel manufacturer's Year 5 annual report disclosed the following information related...
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3 Real World Analysis A steel manufacturer's Year 5 annual report disclosed the following information related to its construction projects, debt, and interest cost ($ thousands). ■ Construction in progress, a component of total property, plant, and equipment, increased from $63,889 to $80,876 in Year 5. Interest capitalized in Year 5 was $5,674. This amount is disclosed in the notes. M M Interest-bearing debt outstanding at the end of Year 4: $190,000 of 9.5% notes; $135,000 of 11.125% notes: and $32,350 of 9% credit line. Required a. Estimate the interest potentially capitalizable in Year 5. b. Provide at least three reasons why the estimate in part a differs from the amount reported by the company. Assume that construction payments are made uniformly during the year. 3 Real World Analysis A steel manufacturer's Year 5 annual report disclosed the following information related to its construction projects, debt, and interest cost ($ thousands). ■ Construction in progress, a component of total property, plant, and equipment, increased from $63,889 to $80,876 in Year 5. Interest capitalized in Year 5 was $5,674. This amount is disclosed in the notes. M M Interest-bearing debt outstanding at the end of Year 4: $190,000 of 9.5% notes; $135,000 of 11.125% notes: and $32,350 of 9% credit line. Required a. Estimate the interest potentially capitalizable in Year 5. b. Provide at least three reasons why the estimate in part a differs from the amount reported by the company. Assume that construction payments are made uniformly during the year.
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a iTo estimate the interest potentially capitalizable in Year 5 we need to determine the weighted av... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date:
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