Compute the weighted-average accumulated expenditures

Reference no: EM131911600

Problem

Marigold Inc. is a book distributor that had been operating in its original facility since 1987. The increase in certification programs and continuing education requirements in several professions has contributed to an annual growth rate of 15% for Marigold since 2012. Marigold' original facility became obsolete by early 2017 because of the increased sales volume and the fact that Marigold now carries CDs in addition to books.

On June 1, 2017, Marigold contracted with Black Construction to have a new building constructed for $5,680,000 on land owned by Marigold. The payments made by Marigold to Black Construction are shown in the schedule below.

Date	Amount
July 30, 2017	$1,278,000
January 30, 2018	2,130,000
May 30, 2018	2,272,000
Total payments	$5,680,000

Construction was completed and the building was ready for occupancy on May 27, 2018. Marigold had no new borrowings directly associated with the new building but had the following debt outstanding at May 31, 2018, the end of its fiscal year.
10%, 5-year note payable of $2,840,000, dated April 1, 2014, with interest payable annually on April 1.
12%, 10-year bond issue of $4,260,000 sold at par on June 30, 2010, with interest payable annually on June 30.

The new building qualifies for interest capitalization. The effect of capitalizing the interest on the new building, compared with the effect of expensing the interest, is material.

Compute the weighted-average accumulated expenditures on Marigold's new building during the capitalization period.

Some interest cost of Marigold Inc. is capitalized for the year ended May 31, 2018.

Compute the amount of each items that must be disclosed in Marigold's financial statements.

Reference no: EM131911600

Questions Cloud

What are the tax consequences for marjorie and the eldorado : What are the tax consequences for Marjorie and the Eldorado Limited Partnership of Marjorie's receipt of the partnership interest?

Which copier should you purchase : You are in the market for a new copier for your office. Assuming your opportunity cost of funds is 5 percent, which copier should you purchase?

How much is tied up in operating current assets : How much is tied up in operating current assets? Show your calculations.

Extend the consideration option : In the case where Joyce v Hill. Hill sold the house from under Joyce after he ORALLY agreed to extend the consideration option until July 1

Compute the weighted-average accumulated expenditures : Compute the weighted-average accumulated expenditures on Marigold's new building during the capitalization period.

What is the real exchange rate for the peseta in may 1981 : Did the peseta appreciate or depreciate against the U.S. dollar in real terms over the period? By how much?

Difference between policy making and administration : What are some of the possible ramifications if these two overlap in a government public safety related program?

Find the ear for the stated rate : Find the EAR for the stated rate (APR) of 15.9 percent compounded continuously.

Examine the role of advertising in consumer behavior : 1) Examine the role of advertising in consumer behavior. 2) Discuss trends and the impact they have on consumer behavior.

User Account

All Pages