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Unformatted text preview: Question 2 On 2/1/2001, Ninja, Inc. began construction of a submarine that will be sold to the U.S. government. On 1/1/2001, Ninja, Inc. borrowed $1,000,000 at an interest rate of 9% specifically to finance part of the construction of this submarine. In addition, it had the following debt during 2001. $2,000,000 12% $3,000,000 10% In 2002, Ninja, Inc. also incurred additional debt of $1,500,000 at an interest rate of 14% for purposes other than construction of the submarine. It incurred the following expenditures in 2001 and 2002: Date Amount 2/1/01 $ 1,600,000 5/1/01 $ 1,400,000 10/1/01 $ 1,000,000 3/1/02 $ 2,000,000 6/1/02 $ 1,000,000 The submarine was completed on 7/1/02. Assume that the submarine is a qualifying asset for interest capitalization. REQUIRED: 1. Calculate the ending balance in the Construction in Process account as of 12/31/01. 2. Calculate the total cost of the submarine as of completion....
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This note was uploaded on 09/20/2011 for the course ACCT 301 taught by Professor Staff during the Spring '11 term at S.F. State.
- Spring '11
- Financial Accounting