In early February 2020, Bridgeport Corp. began construction of an addition to its head office building that is expected to take 18months to complete. The following 2020 expenditures relate to the addition:Feb. 1Mar. 1July 1Dec. 1Dec. 31Payment #1 to contractorPayment to architectPayment #2 to contractorPayment #3 to contractorAsset carrying amount$168,00021,00064,400177,000Amount of interest $$430,400On February 1, Bridgeport issued a $102,000, three-year note payable at a rate of 11% to finance most of the initial payment to thecontractor. No other asset-specific debt was entered into. Details of other interest-bearing debt during the period are provided in thetable below:Other Debt Instruments Outstanding-20209%, 15-year bonds, issued May 1, 2005, matured May 1, 20206%, 10-year bonds, issued June 15, 20146%, 12-year bonds, issued May 1, 2020Principal amount$303,000$500,000$303,000What amount of interest should be capitalized for the fiscal year ending December 31, 2020, according to IAS 23? (Do not roundWhat amount of interest should be capitalized for the fiscal year ending December 31, 2020, according to IAS 23? (Do not roundintermediate calculations. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answer to O decimal places, e.g. 5,275.)

Interest Capitalization According to IAS 23 which specifies the details of the calculation of…

What amount of interest should be capitalized for the fiscal year ending December 31, 2020, according to IAS 23? (Do not round What amount of interest should be capitalized for the fiscal year ending December 31, 2020, according to IAS 23? (Do not round intermediate calculations. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answer to O decimal places, e.g. 5,275.) Amount of interest $

What amount of interest should be capitalized for the fiscal year ending December 31, 2020, according to IAS 23? (Do not round What amount of interest should be capitalized for the fiscal year ending December 31, 2020, according to IAS 23? (Do not round intermediate calculations. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answer to O decimal places, e.g. 5,275.) Amount of interest $

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 9MC

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On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as itsoffice headquarters. The building was completed on September 30, 2019. Expenditures on the project were asfollows:January 1, 2018 $1,000,000March 1, 2018 600,000June 30, 2018 800,000October 1, 2018 600,000January 31, 2019 270,000April 30, 2019 585,000August 31, 2019 900,000On January 1, 2018, the company obtained a $3 million construction loan with a 10% interest rate. The loanwas outstanding all of 2018 and 2019. The company’s other interest-bearing debt included two long-termnotes of $4,000,000 and $6,000,000 with interest rates of 6% and 8%, respectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually on all debt. The company’s fiscal year-end isDecember 31.Required:1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interestmethod.2. What is the total cost of the building?3. Calculate the amount of…
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara Countyfor $10,000,000. The road was completed in 2020. Information related to the contract is as follows:2018 2019 2020Cost incurred during the year $2,400,000 $3,600,000 $2,200,000Estimated costs to complete as of year-end 5,600,000 2,000,000 –0–Billings during the year 2,000,000 4,000,000 4,000,000Cash collections during the year 1,800,000 3,600,000 4,600,000Westgate recognizes revenue over time according to percentage of completion.Required:1. Calculate the amount of revenue and gross profit to be recognized in each of the three years.2. Prepare all necessary journal entries for each of the years (credit “various accounts” for construction costsincurred).3. Prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. Indicate whetherany of the amounts shown are contract assets or contract liabilities.4. Calculate the amount of revenue and gross…
in 2021, the southgate construction company entered into a contract to construct a bridge for $12,000,000. the bridge was completed in 2023. information related to the contract is as follows: 2021 2022 2023 cost incurred during the year $1,840,000 $3,760,000 $4,500,000 estimated costs to complete as of year-end $6,160,000 $4,400,000 $0 billings during the year $3,000,000 $4,000,000 $5,000,000 cash collections during thee year $2,600,000 $3,900,000 $5,100,000 southgate recognizes revenue using the completed contract method. what amount will southgate show on the balance sheet at december 31, 2022? multiple choice costs in excess of billings (asset) $5,600,000 billings in excess of costs (liability) $1,400,000 billings in excess of costs (liability) $280,000 costs in excess of billings (asset) $280,000 If answered within one hour,it would be appreciable!! answer all questions.
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,940,000 March 1, 2021 1,680,000 June 30, 2021 1,880,000 October 1, 2021 1,680,000 January 31, 2022 432,000 April 30, 2022 765,000 August 31, 2022 1,062,000 On January 1, 2021, the company obtained a $4,800,000 construction loan with a 14% interest rate. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $3,000,000 and $7,000,000 with interest rates of 6% and 10%, respectively. Both notes were outstanding during all of 2021 and 2022. 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 2021 and 2022 using the specific…
On January 1, 2026, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2027. Expenditures on the project were as follows: During 2026: January 31 March 1 June 30 October 1 During 2027: January 31 April 30 August 31 $1,000,000 600,000 800,000 600,000 270,000 585,000 900,000 On January 1, 2026, the company obtained a $3 million construction loan with a 10% interest rate. The loan was outstanding all of 2026 and 2027. 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 2026 and 2027. Interest is paid annually on all debt. The company's financial year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2026 and 2027. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will…
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows: 2018 2019 2020 Cost incurred during the year $ 2,184,000 $ 3,510,000 $ 2,316,600 Estimated costs to complete as of year-end 5,616,000 2,106,000 0 Billings during the year 2,120,000 3,574,000 4,306,000 Cash collections during the year 1,860,000 3,400,000 4,740,000 Westgate recognizes revenue over time according to percentage of completion. rev: Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.) 2018 2019 2020 Cost incurred during the year $ 2,184,000 $ 3,860,000 $ 3,260,000 Estimated costs to complete as…
On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows: January 1, 2024 $ 1,040,000March 1, 2024 810,000June 30, 2024 450,000October 1, 2024 700,000January 31, 2025 1,125,000April 30, 2025 1,440,000August 31, 2025 2,610,000On January 1, 2024, the company obtained a $3 million construction loan with a 10% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2024 and 2025. The company’s other interest-bearing debt included two long-term notes of $5,900,000 and $7,900,000 with interest rates of 7% and 9%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required:Using the WEIGHTED-AVERAGE INTEREST METHOD, answer the following…
On January 1, 2021, Company A began the construction of a building to be used as its office headquarters. The building was completed on September 30, 2022. Expenditures on the project were as follows: Company A January 1, 2021 $2,000,000 March 1, 2021 1,600,000 June 30, 2021 1,800,000 October 1, 2021 1,600,000 January 31, 2022 1,270,000 April 30, 2022 1,585,000 August 31, 2022 1,900,000 Construction loan amount $4,000,000 Construction loan interest rate 8% Long-term note $5,000,000 Long-term note interest rate 4% Long-term note $7,000,000 Long-term note interest rate 6% On January 1, 2021, the company obtained a $4 million construction loan with a 8% interest rate. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $5,000,000 and 7,000,000 with interest rates of 4% and 6%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is…
On January 1, 2021, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,740,000 March 1, 2021 1,380,000 June 30, 2021 1,580,000 October 1, 2021 1,380,000 January 31, 2022 387,000 April 30, 2022 720,000 August 31, 2022 1,017,000 On January 1, 2021, the company obtained a $4,300,000 construction loan with a 12% interest rate. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $3,000,000 and $7,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2021 and 2022. 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 2021 and 2022 using the specific interest method. 2. What is the total cost of the…
S On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows: January 1, 2024 March 1, 2024 June 30, 2024 October 1, 2024 January 31, 2025 April 30, 2025 August 31, 2025 $ 1,200,000 690,000 450,000 On January 1, 2024, the company obtained a $3 million construction loan with a 12% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2024 and 2025. The company's other interest-bearing debt included two long-term notes of $5,500,000 and $7,500,000 with interest rates of 7% and 9%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company's fiscal year-end is December 31 660,000 945,000 1,260,000 2,250,000 Required: Using the weighted average interest method, answer the following questions: 1.…
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 3,219,000 $ 3,915,000 $ 1,722,600 Estimated costs to complete as of year-end 5,481,000 1,566,000 0 Billings during the year 2,700,000 4,434,000 2,866,000 Cash collections during the year 2,500,000 4,300,000 3,200,000 Assume that Westgate Construction’s contract with Santa Clara County does not qualify for revenue recognition over time.Required:1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).2-b. In the journal below, complete the necessary journal entries…
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $2,581,000 $2,347,000 $3,049,200 Estimated costs to complete as of year-end 6,319,000 2,772,000 0 Billings during the year 2,090,000 2,838,000 5,072,000 Cash collections during the year 1,845,000 2,900,000 5,255,000 Westgate recognizes revenue over time according to percentage of completion. 2.b. In the journal below,…