Intermediate Accounting P11-2
Intermediate Accounting
P11-2
Capitalization of Interest, Specific and General Debt, Computing Weighted Average Accumulated Expenditures, US GAAP. On January 1, 2104, Union Power and Light commenced construction of a new generating plant to serve the northeast corridor of the state. The total cost of the project is $4,100,000 and it will be completed on June 1, 2015. Scheduled payments to contractors are summarized in the following table.
Date Amount paid
Jan 1, 2014 $950,000
April 1, 2014 $300,000
July 1, 2014 $1,200,000
TOtal 2104 $1,450,000
Febuary 1, 2015 $1,150,000
April 1, 2015 $500,000
Total 2014 $1,650,000
Total expenditures $4,100,000
To finance the project, Union Power obtained a bank loan on Jan 1, 2014 for $1,800,000 at 10% interest. Unions ohter general or direct outstanding debt during 2014 and 2015 includes the following:
General Debt Amount
7% Note $1,000,000
9% Note $3,500,000
6% Bonds $2,000,000
Total $6,500,000
All debt was issued at par and is outstanding for the full year. Interest for all debt is paid on December 31.
REQUIRED:
A.) Determine the amount of interest to be capitalized and expensed by Union Power Company for both 2014 and 2015.
l journal entries required.
C) Determine the final valuation of the power plant.
Answers
Status NEW
Posted 11 Jul 2017 05:07 AM
My Price 20.00
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