Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / On January 1 2011 the Mason Manufacturing Company began construction of a building to be u...

On January 1 2011 the Mason Manufacturing Company began construction of a building to be used as its office headquarters The building was completed on September 30 2012 Expenditures on the

On January 1, 2011, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2012. Expenditures on the project were as follows: January 1, 2011 ....... $1,000,000 March 1, 2011 .......... 600,000 June 30, 2011 ......... 800,000 October 1, 2011 ........ 600,000 January 31, 2012 ......... 270,000 April 30, 2012 .......... 585,000 August 31, 2012 ........ 900,000 On January 1, 2011, the company obtained a $3 million construction loan with a 10% interest rate. The loan was outstanding all of 2011 and 2012. The company s other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2011 and 2012. Interest is paid annually on all debt. The company s fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2011 and 2012 using the specific interest method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in the 2011 and 2012 income statements.

Apr 22 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions