Answer:
Vaughn Manufacturing
1. The weighted-average accumulated expenditures for 2017 were:
c. $1,200,000.
2. The interest capitalized for 2017 was:
b. $144,000
3. The weighted-average accumulated expenditures for 2018 by the end of the construction period were:
= $2,546,000.
4. The interest capitalized for 2018 was:
= $267,000.
Explanation:
a) Data and Calculations:
Expenditures for the construction were as follows:
Date Amount of No. of months Weighted Average
expenditure Expenditure
2020:
January 2, 2020 $613,000 12/12 $613,000
September 1, 2020 1,802,400 4/12 600,800
December 31, 2020 1,802,400 0/12 0
Total weighted-average expenditure for 2020 = $1,213,800
Which is approximately = $1,200,000
Interest capitalized = $144,000 ($1,200,000 * 12%)
Capitalized expenditure by December 31, 2020 = $1,344,000 ($1,200,000 + $144,000)
Date Amount of No. of months Weighted Average
expenditure Expenditure
2021:
January 1, 2021 1,344,000 9/9 $1,344,000
March 31, 2021 1,802,400 6/9 1,201,600
September 30, 2021 1,203,000 0/9 0
Total weighted-average expenditure for 2020 = $2,545,600
Which is approximately $2,546,000
Interest capitalized for 2018 = $267,330 ($2,546,000 * 10.5%)
Approximately $267,000
