Capitalization of Interest E10-7 Acc 550

Name Section Date (Capitalization of hobby) 10/10/2012 transaction 10-7 McPherson furniture gild E10-7 (Capitalization of engross) McPherson Furniture Company started social organization of a combination mapping and wareho consumption expression 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 disturb enumeration: (a) Construction Loan $ average out compile Expenditures 2,000,000.00 please Rate Avoidable Interest 12% $ 240,000.00 scamerm award ** $ $ 1,800,000.00 3,800,000.00 10.38% $ 186,840.00 $ 426,840.00 Weighted-average interest array computation: Short term loan 10% farsighted term loan 11% primitive 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) factual 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, enact it on our website: OrderEssay.net

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