Reference no: EM133077719

Questions -

Q1. Flounder Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2020.

Purchase

Cash paid for equipment, including sales tax of $6,900 $144,900

Freight and insurance cost while in transit 2,760

Cost of moving equipment into place at factory 4,278

Wage cost for technicians to test equipment 5,520

Insurance premium paid during first year of operation on this equipment 2,070

Special plumbing fixtures required for new equipment 11,040

Repair cost incurred in first year of operations related to this equipment 1,794

Construction

Material and purchased parts (gross cost $276,000; failed to take 2% cash discount) $276,000

Imputed interest on funds used during construction (stock financing) 19,320

Labor costs 262,200

Allocated overhead costs (fixed-$27,600; variable-$41,400) 69,000

Profit on self-construction 41,400

Cost of installing equipment 6,072

Required - Compute the total cost to be capitalized for each of these two pieces of equipment.

Purchase equipment

Construction equipment

Q2. Splish Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,884,000 on March 1, $1,284,000 on June 1, and $3,082,450 on December 31. Compute Splish's weighted-average accumulated expenditures for interest capitalization purposes. Weighted average accumulated expenditures is?