tion n propetya Ustance I Costs to be included as R&D; activities. interest capi
ID: 2590151 • Letter: T
Question
tion n propetya Ustance I Costs to be included as R&D; activities. interest capitalization in a nonmonetary exchange. exct On January 1, 2018, th e headquarters. The building was completed incurred evenly throughout the year, totaled $6,000,000. Marjlee had the following or outstanding during all of 2018: e Marjlee Company began construction of an office buil early in 2019. eupen ruction expenditures for 2018, which were the following debt obligations which were arjlee had Construction loan, 10% Long-term note, 9% Long-term note, 6% $1,500,000 2,000,000 4,000,000 Required: Calculate the amount of interest capitalized in 2018 for the building using the specific interest method On January 1, 2018, the Shagri Company began construction on a new manufacturing facility for its own use. The uilding was completed in 2019. The only interest-bearing debt the company had outstanding during 2018 was ong-term bonds with a book value of$10,000,000 and an effective interest rte of 8%. Construction expenditures curred during 2018 were as follows: January 1 March 1 July 31 September 30 December 31 $500,000 600,000 480,000 600,000 300,000 quired Iculate the amount of interest capitalized for 2018Explanation / Answer
Compute weighted average interest rate for the debts other than the construction loan as follows:
Compute the amount of interest to be capitalized by Marjlee as follows:
Interest capitalized = ($1,500,000 x 10%) + ($4,500,000 x 7%) = $465,000
(A) (B) (AxB) Loan Amount Interest rate Interest Long-term note, 9% 2000000 9% 180000 Long-term note, 6% 4000000 6% 240000 6000000 420000 Weighted-average interest rate (420,000/6000000) 7.00%Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.