Problem - Depreciation Methods

A machine which cost $400,000 is acquired on January 1, 2017. Its estimated salvage value is $100,000 and its expected life is five years.

Instructions

Calculate depreciation expense and complete the following schedules for 2017 and 2018 for each of the following methods.

A. Straight Line Depreciation

B. Sum of the Years Digits

Problem Weighted-Average Accumulated Expenditures

Gutierrez Company is constructing a building. Construction began in 2020 and the building was completed 12/31/20. Gutierrez made payments to the construction company of $6,000,000 on 7/1, $13,200,000 on 9/1, and $12,000,000 on 12/31.

#13. Weighted-average accumulated expenditures were $

Problem Interest Capitalized

During 2020, Kimmel Co. incurred weighted-average accumulated expenditures of $1,600,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2020 was a $2,000,000, 10%, 5-year note payable dated January 1, 2020.

#14. What is the amount of interest that should be capitalized by Kimmel during 2020?

Problem Interest Capitalized

On January 2, 2020, Indian River Groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on December 31, 2020. Expenditures for the construction were as follows:

January 2, 2020	$ 600,000
March 1, 2020	1,800,000
June 31, 2020	1,800,000
September 31, 2020	1,800,000
December 31, 2020	1,200,000

Indian River Groves borrowed $3,300,000 on a construction loan at 12% interest on January 2, 2020. This loan was outstanding during the construction period. The company also had $12,000,000 in 9% bonds outstanding in 2020.

#15. The interest capitalized for 2020 was $