Question

Question 9 (1 point) On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows: January 1, 2018 $300,000 September 1, 2018 $450,000 December 31, 2013 $450,000 March 31, 2019 $450,000 September 30, 2019 $300,000 Dreamworld had $5,000,000 in 12% bonds outstanding through both years. The average accumulated expenditures for 2019 by the end of the construction period was: $1,950,000. $1,554,000. $1.254,000 $975,000 Question 10 (1 point) On September 30, 2018. Corso Steel acquired a patent from Thermo Steel. The agreement specified that Corso will pay Thermo $1.000.000 immediately and then another $1,000,000 on September 30, 2020. An interest rate of 8% reflects the time value of money for this type of loan agreement What amount of interest expense, if any, would Corso record on December 31. 2019, the company's fiscal year end? $68,687 $60.000 $80.000 $69,959. Question 11 (1 point) On September 30, 2018, Corso Steel acquired a patent from Thermo Steel. The agreement specified that Corso will pay Thermo $1.000.000 immediately and then another $1.000.000 on September 30, 2020. An interest rate of 8% reflects the time value of money for this type of loan agreement What amount of interest expense, if any, would Corso record on December 31. 2018, the company's fiscal year end? $17.147 $20,000 $68,687 $80,000

Answer 1

Part 9

Answer is option A

A. $1950000

January 1, 2018	300000	12/12	300000
September 1, 2018	450000	4/12	150000
December 31, 2018	450000	0/12	0
	1200000		450000

January 1, 2019	1650000	9/9	1650000
March 31, 2019	450000	6/9	300000
September 30, 2019	300000	0/9	0
	2400000		1950000

Part 10

Answer is option D

D. $69959

Present value of note payable = 1000000 * 0.85734 = $857340

Present value factor of $1 for n= 2 and i= 8% is 0.85734

Interest expense (Amortization of discount) for 2018= 857340 * 8% * 3/12 = $17147

Interest expense for 2019 = (857340 + 17147) * 8% * 12/12 = $69959

Part 11

Answer is option A

A. $17147

Present value of note payable = 1000000 * 0.85734 = $857340

Present value factor of $1 for n= 2 and i= 8% is 0.85734

Interest expense (Amortization of discount) for 2018= 857340 * 8% * 3/12 = $17147