PROBLEM 10-6 - 1-Jan 1,220 6/12 610 1-Mar 240,000 4/12...

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PROBLEM 10-6 Interest Capitalization Balance in the Land Account Purchase Price $142,000 Surveying Costs 2,000 Title Insurance Policy 4,000 Demolition Costs 3,000 Salvage (1,000) Total Land Cost $150,000 Expenditures (2005) Date Amount Fraction Weighted—Average Accumulated Expenditures 1-Dec $150,000 1/12 $12,500 1-Dec 30,000 1/12 2,500 1-Dec 3,000 1/12 250 $183,000 $15,250 Interest Capitalized for 2005 Weighted—Average Accumulated Expenditures Interest Rate Amount Capitalizable $15,250 0.08 $1,220 Interest charged to Interest Expense
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[($600,000 X .08 X 1/12) – $1,220] $2,780 10-55 PROBLEM 10-6 (Continued) Expenditures (2006) Date Amount Fraction Weighted Expenditure 1-Jan $183,000 6/12 $ 91,500
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Unformatted text preview: 1-Jan 1,220 6/12 610 1-Mar 240,000 4/12 80,000 1-May 360,000 2/12 60,000 1-Jul 60,000 0 0 $844,220 $232,110 Interest Capitalized for 2006 Weighted Expenditure Interest Rate Amount Capitalizable $232,110 0.08 $18,568.80 Interest charged to Interest Expense [($600,000 X .08) $18,568.80] $29,431.20 (a) Balance in Land Account2005 and 2006 150,000.00 (b) Balance in Building2005 34,220.00* Balance in Building2006 712,788.80** (c) Balance in Interest Expense2005 2,780.00 Balance in Interest Expense2006 29,431.20 *$30,000 + $3,000 + $1,220 **$34,220 + $240,000 + $360,000 + $60,000 + $18,568.80 10-56...
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This note was uploaded on 06/06/2010 for the course ACCOUNTING ac505 taught by Professor Khan during the Spring '10 term at DeVry Fremont.

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PROBLEM 10-6 - 1-Jan 1,220 6/12 610 1-Mar 240,000 4/12...

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