Capitalization of Interest E10-7 Acc 550

Name Section Date (Capitalization of spare-time activity) 10/10/2012 rehearse 10-7 McPherson furniture gild E10-7 (Capitalization of amuse) McPherson Furniture Company started formula of a combination mapping and wareho determination build for its own use at an estimated apostrophize of $5,000,000 on January 1, 2012. McPherson expected to complete the building by celestial latitude 31, 2012. McPherson has the following debt obligations outstanding during the construction period Weighted McPherson Furniture Company Avoidable vexation enumeration: (a) Construction Loan $ average out compile Expenditures 2,000,000.00 quest Rate Avoidable Interest 12% $ 240,000.00 conciselyerm sum ** $ $ 1,800,000.00 3,800,000.00 10.38% $ 186,840.00 $ 426,840.00 Weighted-average interest array computation: Short term impart 10% farsighted term loan 11% organic Interest $ wide-cut Principal $ 270,000.00 = 2,600,000.00 ** 10.38% Principal $ 1 ,600,000.00 $ 1,000,000.00 $ 2,600,000.00 Interest $ 160,000.00 $ 110,000.00 $ 270,000.

00 (b) veridical interest computation: Principal Construction loan Short term loan Long term loan $ $ $ $ 2,000,000.00 1,600,000.00 1,000,000.00 4,600,000.00 Interest Rate 12% 10% 11% Actual Interest $ 240,000.00 $ 160,000.00 $ 110,000.00 $ 510,000.00 Avoidable interest is $ 426,840.00 LOWER < than Total cost, including interest capitalisation: Cost: Interst Capitalized Total cost, including interest capitalization: $ 510,000.00 Actual Interest $ 5,200,000.00 $ 426,840.00 $ 5,626,840.00 Depreciation cost: $ 5,626,840.00 minus $ 300,000 Salvage value /30 years = $117,561 $! 177,561.33 387 If you involve to get a full essay, bless it on our website: BestEssayCheap.com

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