During 2020, Kurylys Company engaged in modernization of its manufacturing facility. Construction was begun on January...

  

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During 2020, Kurylys Company engaged in modernization of its manufacturing facility. Construction was begun on January 1, 2020 and was completed on December 31, 2020. Kurylys Company incurred the following construction costs during 2020: Construction costs Date January 1, 2020 $1,000,000 August 31, 2020 $2,500,000 December 31, 2020 $1,500,000 In order to finance the construction, Kurylys Company issued the following during 2020: 1. $1,500,000 of 5-year, 12% bonds payable, issued at par on January 1, 2020, with interest payable annually in January. 2. 500,000 shares of no-par common stock, issued at $10 per share on October 1, 2020. In addition to the 12% bonds payable, the only debt outstanding during 2020 was a $400.000, 10% note payable dated January 1, 2013 and due January 1, 2023. with interest payable annually on January 1. Required: Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. (7 points) 2. Avoidable interest incurred during 2020. (7 points) 3. Total amount of interest cost to be capitalized during 2020. (11 points) During 2020, Kurylys Company engaged in modernization of its manufacturing facility. Construction was begun on January 1, 2020 and was completed on December 31, 2020. Kurylys Company incurred the following construction costs during 2020: Construction costs Date January 1, 2020 $1,000,000 August 31, 2020 $2,500,000 December 31, 2020 $1,500,000 In order to finance the construction, Kurylys Company issued the following during 2020: 1. $1,500,000 of 5-year, 12% bonds payable, issued at par on January 1, 2020, with interest payable annually in January. 2. 500,000 shares of no-par common stock, issued at $10 per share on October 1, 2020. In addition to the 12% bonds payable, the only debt outstanding during 2020 was a $400.000, 10% note payable dated January 1, 2013 and due January 1, 2023. with interest payable annually on January 1. Required: Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. (7 points) 2. Avoidable interest incurred during 2020. (7 points) 3. Total amount of interest cost to be capitalized during 2020. (11 points)

Answer rating: 100% (QA)

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