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Oceanwide Enterprises Inc is involved in building and operating cruise ships Each ship is identified as a separate discrete job in the accounting records At the end of 2010 Oceanwide correctly

Oceanwide Enterprises, Inc., is involved in building and operating cruise ships. Each ship is identified as a separate discrete job in the accounting records. At the end of 2010, Oceanwide correctly reported $5,400,000 as Construction in Progress on the following jobs.  Construction costs for 2011, and the dates the expenditures were made, were as follows:  Oceanwide had the following general liabilities at December 31, 2011: 12%, 5-year note (maturity date—2013) . . . . . . . . . . . . . . . . . . . . . $2,000,000 10%, 10-year bonds (maturity date—2016) . . . . . . . . . . . . . . . . . . . 8,000,000 On January 1, 2011, Oceanwide borrowed $2,000,000 specifically for the construction of ship 343. The loan was for three years with interest at 13%. Instructions: 1. Compute the maximum interest that can be capitalized in 2011. 2. Compute the weighted-average interest rate for the general liabilities for 2011. 3. Compute the interest that Oceanwide should capitalize during2011.

Jun 16 2020 View more View Less

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