Q4 Take Home Quiz solution_W09

Q4 Take Home Quiz solution_W09 - Accounting 381 Quiz 4...

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Accounting 381 Name:_______________________ Quiz 4 ; Section 10:15 – 12:05 Score _____/ 15 1. Gerald Corporation constructed a building at a cost of $10,000,000. Average accumulated expenditures were $4,000,000, actual interest was $600,000, and avoidable interest was $300,000. If the salvage value is $800,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is a. $245,000. b. $337,500. c. $237,500. d. $257,500. 2. Gerber Company is constructing a building. Construction began in 2008 and the building was completed 12/31/08. Gerber made payments to the construction company of $1,000,000 on 7/1, $2,100,000 on 9/1, and $2,000,000 on 12/31. Average accumulated expenditures were a. $1,025,000. b. $5,100,000. c. $3,100,000. d. $1,200,000. 3. During 2007, Ziba Corporation constructed assets costing $1,000,000. The weighted-average accumulated expenditures on these assets during 2007 was $600,000. To help pay for construction, $440,000 was borrowed at 10% on January 1, 2007, and funds not needed for construction were temporarily invested in short-term securities, yielding $9,000 in interest revenue. Other than the construction funds borrowed, the only other debt outstanding during the year was a $500,000, 10-year, 9% note payable dated January 1, 2001. What is the amount of interest that should be capitalized by Ziba during 2007? a.
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This note was uploaded on 11/04/2010 for the course ACG 3103 taught by Professor Rue,j during the Spring '10 term at FGCU.

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Q4 Take Home Quiz solution_W09 - Accounting 381 Quiz 4...

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