On July 31, 2014, Amsterdam Company engaged Minsk Tooling Company to construct a

Question

On July 31, 2014, Amsterdam Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2014. To help finance construction, on July 31 Amsterdam issued a $555,600, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $453,600 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Amsterdam made a final $102,000 payment to Minsk. Other than the note to Netherlands, Amsterdam’s only outstanding liability at December 31, 2014, is a $32,000, 8%, 6-year note payable, dated January 1, 2011, on which interest is payable each December 31.

Interest Revenue: $_____ ?

Weighted-average accumulated expenditures: $____ ?

Avoidable interest: $_____ ?

Interest capitalized: $______ ?

Explanation / Answer

Weighted-average accumulated expenditures= 113400

Computation of Weighted-Average Accumulated Expenditures Date Amount Capitalization
Period Weighted-Average
Accumulated Expenditures Jul-31 4,53,600 3 / 12 113400 Nov-01 1,02,000                                          -   0

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