User Account

All Pages

Problem - Capitalization of Interest

Assignment Help Accounting Basics
Reference no: EM132476607

Problem - Capitalization of Interest

McPherson Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of €5,000,000 on January 1, 2019. McPherson expected to complete the building by December 31, 2019. McPherson has the following debt obligations outstanding during the construction period.

Construction loan-12% interest, payable semiannually, issued December 31, 2018 €2,000,000

Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2020 1,600,000

Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2023 1,000,000

Required -

a. Assume that McPherson completed the office and warehouse building on December 31, 2019, as planned at a total cost of €5,200,000, and the weighted-average accumulated expenditures was €3,800,000. Compute the avoidable interest on this project.

b. Compute the depreciation expense for the year ended December 31, 2020. McPherson elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a residual value of €300,000.

Reference no: EM132476607

Questions Cloud

ECE 456 Embedded Control and Mechatronics Assignment : ECE 456 Embedded Control and Mechatronics Assignment Help and Solution, Southern Illinois University - Homework Help - Explain how the frequency
Determine by how many percent against nzd : Assume that the NZD is undervalued by 24.62% against the USD. Then the USD is overvalued Determine by how many % against NZD?
Problem - Calculation of EPS : Calculation of EPS. The options were exercised on September 1, 2021. Compute Berclair's basic and diluted earnings per share for year ended December
How many percent USD overvalued according to UIRP condition : Assume that the one year interest rates for USD and CHF are USD, By how many % is the USD overvalued/undervalued according to UIRP condition?
Problem - Capitalization of Interest : Compute the depreciation expense for the year ended December 31, 2020. McPherson elected to depreciate the building on a straight-line basis
What is carry trade profit at t in aud : Currency at t=0 and that the spot rate does not change between t=0 and t=1, so USD/AUD = 0.73. What is carry trade profit at t=1 in AUD?
Draw a diagram showing the market for generators : Draw a diagram showing the market for generators with an equilibrium price at $250. Now impose a price ceiling at $200 per generator.
How many percent USD overvalued against the EUR : Currently the spot rate is XUSD/EUR =1.18. According to APPP, by how many percent is the USD overvalued/undervalued against the EUR?
Effects of the strong increase in australian exports : Discuss the effects of the strong increase in Australian exports, leading to a strong increase in GDP on the equilibrium wage and employment level of an economy

Reviews

Write a Review

Accounting Basics Questions & Answers

  How many units must be purchased in september

Lingstat Company is trying to decide how many units of merchandise to order each month. How many units must be purchased in September

  What is simons total federal income tax liability

Simon, age 12, generates $6,800 interest income and no earned income for 2018. What is Simons total Federal income tax liability

  Write description of natures of the issues in the case

Description of the company, industry, and market in the case to understand why the issues occurred. Description of natures of the issues in the case.

  On january 1 a company issues bonds dated january 1 with a

on january 1 a company issues bonds dated january 1 with a par value of 300000. the bonds mature in 5 years. the

  Prepare the journal entry to record the declaration

Earn Hart Corporation has outstanding 3,000,000 shares of common stock of a par value of $10 each. The balance in its retained earnings account at January 1, 2010, was $24,000,000, and it then had Additional Paid-in Capital of $5,000,000.

  Determine the amount of lease payment that the lessor

Given: Interest rate implicit in the lease = 6%. Determine the amount of lease payment that the lessor would require to lease the asset

  Compute the pension expenditures to be reported

Compute the pension expenditures to be reported in each of the following situations: The county contributed $5,000,000 to the pension plan

  How does the asset impairment measurement approach

How does the asset impairment measurement approach of SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, compare to deprival value?

  Prepare a net present value analysis for the train.

Hardwares Ince is going to purchase a train for production. The train will cost $19 million and is expected. Prepare a net present value analysis for the train.

  Assume the same facts as parta except that the warrants had

on may 31 2007 core company issued 1000 14 10-year 1000bonds at 105. each bond was issued with one detachable stock

  Who are the stakeholders in given situation

What should Joe consider about this invitation?- Who are the stakeholders in this situation? - What are the potential outcomes to this situation?

  Overhead application rate of canoe company

Canoe Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. Canoe Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied..

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