Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is...
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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 $ 420,000 465,000 636,000 March 1 June 30 Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $5 million borrowed on July 1, 2018, at 12% $11 million borrowed on January 1, 2017, at 6% Required: 1,428,000 672,000 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 20 years and a residual value of 50, compute the straight-line depreciation in 2020. S income than if it had not capitalized 3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report higher interest. In future periods, the same company will report tower... income than if it had not capitalized interest. 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 $ 420,000 465,000 636,000 March 1 June 30 Amounts borrowed and outstanding: $1.7 million borrowed at 10%, specifically for the project $5 million borrowed on July 1, 2018, at 12% $11 million borrowed on January 1, 2017, at 6% Required: 1,428,000 672,000 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 20 years and a residual value of 50, compute the straight-line depreciation in 2020. S income than if it had not capitalized 3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report higher interest. In future periods, the same company will report tower... income than if it had not capitalized interest.
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Compute the amount of interest costs capitalized each year Step 1 Calculate the weighted average accumulated expenditures for each year 2019 January 1 ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
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