User Account

All Pages

Prepare the journal entry to record the capitalization

Assignment Help Accounting Basics
Reference no: EM132007298

Question 1 - Nonmonetary Exchange

Mathews Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the operations of Biggio Company. The following information pertains to the exchange.

Mathews Co. Biggio Co.

Equipment (cost) $54,000 $54,000

Accumulated depreciation 36,000 18,000

Fair value of equipment 25,000 31,000

Cash given up 6,000

Instructions -

(a) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.

(b) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.

Question 2 - Capitalization of Interest

On December 31, 2013, Jumble Inc. borrowed $1,000,000 at 10% payable annually to finance the construction of a new building. In 2014, the company made the following expenditures related to this building: June 1, $400,000; July 1, $600,000; September 1, $1,200,000; December 1, $600,000. The building was completed in April 2015. Additional information is provided as follows. Other Debt Outstanding:

10-year, 8% bond, dated December 31, 2012, interest payable annually $10,000,000

15-year, 10% note, dated December 31, 2009, interest payable annually $2,500,000

Instructions -

(a) Determine the amount of interest to be capitalized in 2014 in relation to the construction of the building.

(b) Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2014.

(c) Prepare the journal entry to record the capitalization of interest for 2015?

Reference no: EM132007298

Questions Cloud

What is the difference between the two : Discuss the growth rate and the discount rate. What is the difference between the two?
Determining the hedging strategy : If the annual discrete compounding risk-free rate is 10%, and the cost of carry offsets the convenience yield exactly, then what is your hedging strategy?
What are the treynor and sharpe ratios of two companies : My example is suppose that a company called Tweedledee Company has an average return of 18%, and the Tweedledum Company has an average return of 10%.
Compute the expected rate of return on ffc stock : Dividends are expected to grow at a constant rate of 4.5% indefinitely. Compute the expected rate of return on FFC stock.
Prepare the journal entry to record the capitalization : Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2014
Interest rate on the loan with the compensating balance : how low would the interest rate on the loan with the compensating balance have to be in order for you to choose it?
Record each transaction in the journal : June 30 Declared and paid dividends of $3,000. Record each transaction in the journal. Key each transaction by date. Explanations are not required
Expected value of earnings per share after refinancing : If the company repurchases 25 percent of the common stock and substitutes an equal value of debt yielding 6 percent, what is the expected value of earnings
Meet relate to the weighted average cost : How does the capital charge, which District Health Boards are required to meet relate to the weighted average cost of (WACC) discussed

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determine the amount of cost to be capitalized

In each of these cases, determine the amount of cost to be capitalized in the asset accounts.

  Compute the companys gross profit percentage

Cupcake Queen earned net sales revenue of $68,000,000 in 2016. Cost of goods sold was &40,820,000. Compute the company's gross profit percentage for 2016.

  Compute the annual breakeven number of meals

Compute the annual breakeven number of meals and sales revenue for the restaurant

  Prepare the adjusted bank balance section of the ocober

Assuming outstanding checks total $2,450, prepare the adjusted bank balance section of the Ocober 30, 2019, bank reconciliation

  Use a financial statements model like the one shown below

Determine the amount of interest expense reported on the 2014 income statement.

  Prepare a depreciation schedule for machine

Prepare a depreciation schedule for Machine B using the straight-line depreciation method. Presented below are selected transactions at Ridge Company for 2017

  Prepare all the necessary entries for information

The Feldbrand Corporation purchases 1,000 shares of IBM at $100 and 1,000 shares of Bell Labs at $125. It receives dividends of $1.00 per share on all shares. Prepare all the necessary entries for this information.

  Calculate the corporation alternative minimum tax

X Corporation, a calendar year corporation, If the regular corporate tax is $21,000, X Corporation's alternative minimum tax for 2016 is:

  Customers on the afternoon of the party

She sets up a home catering business and immediately agrees to cater for 100 people attending a 21st birthday party for a price of £300. She insists on £100 deposit. As the day for the party approaches, she finds that she has taken on too much wor..

  How does the accounting write-off of design and development

how does the accounting write-off of design and development costs as current period expenses affect managers incentives

  Each unit of finished product requires 5 pounds of raw

each unit of finished product requires 5 pounds of raw materials. the firms policy is to have raw material inventory on

  What is the objective of convergence

FASB and IASB have been working on a Convergence Project for over ten years. In a 1-page essay discuss the two standard-setters and the body of standards issued by each. What is the objective of convergence?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd