Chapter 10 - Chapter10 Q1( Early in 2007 Maley Corporation...

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Chapter 10 Q1. (Capitalization of Interest)   Early in 2007, Maley Corporation engaged Reese, Inc. to design and construct a complete modernization of Maley's manufacturing facility. Construction was begun on June 1, 2007 and was completed on December 31, 2007. Maley made the following payments to Reese, Inc. during 2007: Date Payment June 1, 2007 $3,600,000 August 31, 2007 5,400,000 December 31, 2007 4,500,000 In order to help finance the construction, Maley issued the following during 2007: 1. $3,000,000 of 10-year, 9% bonds payable, issued at par on May 31, 2007, with interest payable annually on May 31. 2. 1,000,000 shares of no-par common stock, issued at $10 per share on October 1, 2007. In addition to the 9% bonds payable, the only debt outstanding during 2007 was a $750,000, 12% note payable dated January 1, 2003 and due January 1, 2013, with interest payable annually on January 1. Instructions Compute the amounts of each of the following (show computations): (a) Weighted-average accumulated expenditures qualifying for capitalization of interest cost. (b) Avoidable interest incurred during 2007.
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This note was uploaded on 04/09/2010 for the course ACC 5110 taught by Professor Lee during the Winter '10 term at Wayne State University.

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Chapter 10 - Chapter10 Q1( Early in 2007 Maley Corporation...

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