Reference no: EM133067430
Question - Sunrise Corp is constructing a coffee shop. Construction began on 2/1/19 and the coffee shop was completed 12/31/19. Sunrise made payments to the construction company of $300,000 on 7/1, $580,000 on 9/1, and $210,000 on 10/1.
Sunrise Corp took out a loan to help pay for this construction on 6/1/19 for $681,000 of which the principle and interest is all due on 3/1/20. The loan has an interest rate of 8%.
Other loans that Sunrise has include 1) $405,000 5-year loan with a 4% interest that started 1/1/19 and 2) $241,000 3-year loan with a 7% interest that started 1/1/20.
1. Maximum weighted average accumulated construction expenses that can be capitalized for 2019?
2. Amount of interest expense that is capitalized for 2019?
3. Balance of the interest expense account as of 12/31/19 after all adjustments were made?
4. Balance of the building under construction account as of 12/31/19 after all adjustments have been made.
On 12/1/19, Henry wants to review some trading options for his car. First, here is some information about his old car:
Purchase Price on 1/1/19: $800,000
Accumulated Depre up to date: $240,000
Fair Value on 12/1/20 : $675,000
a. For Car #1, Henry could purchase it for $50,000 cash paid plus trade in his old car. The new car #1 has a fair value of $600,000. The old and new cars would be different. What would the journal entry be for this trade?
b. For car #2, Henry could purchase it for $64,000 cash paid plus trade in his old car. The new car #2 has a fair value of $644,000. The old and new cars would be similar. What would the journal entry be for this trade?
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