Reference no: EM132344715
Question
Laserwords, Inc. is a book distributor that had been operating in its original facility since 1987. The increase in certificate programs and containing education requirements in several professions has contributed to an annual growth rate of 15% for Laserwords since 2012.
Laserwords original facility became obsolete by early 2017 because of the increased sales volume and the fact that Laserwords now carries CDs in addition to books. On June 1, 2017 Laserwords contracted Black Construction to have a new building constructed for $4,000,000 on land owned by Laserwords.
The payment schedule is
July 30, 2017 $900,000
January 20, 2018 $1,500,000
May 30, 2018 $1,600,000
Total is $4,000,000
Construction was completed and the building was ready for Occupancy May 27, 2019. Laserwords had no new borrowings directly associated with the new building but the following debt outstanding on May 31, 2018
10% 5 year note payable of $2 mill, dated April 1 2014 with interest payable annually on April 1.
12% 10 year bond issue of $3 mill sod on June 30 with interest payable annually on June 30.
Compute the weighted average accumulation expenditures on Laserwords new building during the capitalization period.