Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 07 May 2018 My Price 8.00

Alta Company

P10-9     Interest During Construction The Alta Company is constructing a production complex which qualifies for interest capitalization. The following information is   available:

Capitalization period: January 1, 2007 to June 30, 2009

 

 

 

 

 

Expenditures on project (incurred evenly during each period and excluding capitalized interest from previous years):

 

2007

$2,000,000

2008

$3,760,000

2009

$4,324,000

Amounts borrowed and outstanding:

$3 million borrowed at 12%, specifically for the project

$6 million borrowed on July 1, 2003, at 14%

$14 million borrowed on January 1, 1999, at 8%

Required

1.      Compute the amount of interest costs capitalized each year.

2.      If it is assumed that the production complex has an estimated life of 20 years and a residual value of zero, compute the straight-line depreciation in 2010.

3.      Explain the effects of the interest capitalization on the financial statements for all three years. Ignore income taxes.

Answers

Maurice Tutor
(5)
Status NEW Posted 07 May 2018 04:05 PM My Price 8.00

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