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Zinaida [17]
3 years ago
5

On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was c

ompleted in 2022. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $5,000,000, 12% bonds $3,000,000, 8% long-term note Construction expenditures incurred during 2021 were as follows: January 1 $ 600,000 March 31 1,200,000 June 30 800,000 September 30 600,000 December 31 400,000 Required: Calculate the amount of interest capitalized for 2021 using the specific interest method
Business
1 answer:
exis [7]3 years ago
3 0

Answer: $177,750

Explanation:

January 1st  

Construction expenditure 600,000

outstanding interest   12/12= 1

Accumulated expenditure= 600,000

x1 = $600,000

March 31

Construction expenditure = 1,200,000

outstanding interest  9/12=3/4

Accumulated expenditure= 3/4x1,200,000=$ 900.000

June 30

construction expoenditure= 800,000

outstanding interest= 6/12=1/2

Accumulated expenditure= 1/2 x 800000= $400000

September 30

construction expenditure=600,000

outstanding interest=3/12

Accumulated expenditure- 1/4 x600,000=$150,000

December 31

Construction expenditure= 400,000

outstanding interest =0/12

Accumulated expenditure=0

Total of the average accumulated expenditure  =$2,050,000

Weighted average on other debts  

Bonds interest of  12% for $5,000,000= $600,000

Long term note = 8% for $3,000,000 =240,000

Total = $840,000

weighted average =$840,000/(3,000,000 + 5,000,000)

= 840,000/8,000,000= 10.5%

Amount of difference =average accumulated expenditure- construction loan

=$2,050,000- $1,500,000

=$550,000

Interest on difference =10.5/100 x $550,000

=$57,750

Interest on amount on construction loan= 8/100 x  $1,500,000

= $120,000

Amount of interest capitalized  = interest on construction loan + interest on amount obtained from difference of accumulated expenditure and construction loan = $120,000+ $57,750 = $177,750

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Answer:

Option (b) is correct.

Explanation:

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Gain realised:

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Tax paid = Gain realised × preferential rate

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6 0
3 years ago
Skolits Corp. issued 10-year bonds 2 years ago at a coupon rate of 8.7 percent. The bonds make semiannual payments. If these bon
kykrilka [37]

Answer:

7.36%

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YTM = Rate(Nper, pmt, -Pv, Fv)*2

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3 years ago
Parker Corporation has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply ma
AnnyKZ [126]

Answer:

Unitary cost= $62.5

Explanation:

Giving the following information:

Predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year, manufacturing overhead and direct labor-hours for the year were estimated at $50,000 and 20,000 hours.

Materials costs on the job totaled $4,000 and labor costs totaled $1,500 at $5 per hour.

First, we need to determine the allocated MOH:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 50000/20000= $2.5 per direct labor hour

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base= 2.5* (1500/5)= $750

Total cost= 4000 + 1500 + 750= $6,250

Unitary cost= 6250/100= $62.5

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3 years ago
______ is a tool that reminds managers to look at several distinct categories in the macro environment.
nata0808 [166]

Pestel  is a tool that reminds managers to look at several distinct categories in the macro environment.

<h3>What is the macro environment?</h3>

This is the term that is used to refer to the environment that is made up of the major forces that are both external and also uncontrollable that is used to influence the decision making process of a firm.

The macro environment is made up of such factors such as demographics, economy, technology, political and a lot more of other factors. They are used to control the decision making process in the nation. It is also referred to as the environment at large

Read more on macro environment here: brainly.com/question/16080962

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masha68 [24]

Answer:

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