Question

Exercise 10-9 (Part Level Submission) On July 31, 2017, Pina Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2017. To help finance construction, on July 31 Pina issued a $278,400, 3-year, 12% note payable at Netherlands National Bank, on which interest is payable each July 31. $188,400 of the proceeds of the note was paid to Minsk on July 31. The remainder of the proceeds was temporarily invested in short-term marketable securities (trading securities) at 10% until November 1. On November 1, Pina made a final $90,000 payment to Minsk. Other than the note to Netherlands, Pina’s only outstanding liability at December 31, 2017, is a $32,000, 8%, 6-year note payable, dated January 1, 2014, on which interest is payable each December 31.

Exercise 10-9 (Part Level Submission) On July 31, 2017, Pina Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2017. To help inance construction, on luly 31 Pina issued a $278 4 3-year, 12% note payable at Netherlands National Bank on which Interest is payable each July 31 $188 400 of the proceeds of the note was paid to Minsk on lu y 31. The remainder of the proceeds was temporarily invested in short-term marketable securit es trading securities at 10% until November 1 On November i Pina made a final s o o payment to Minsk. Other than the note to Netherlands, Pina's only outstanding liability at December 31, 2017, is a $32,000, 8%, 6-year note payable, dated January 1, 2014, on which interest is payable each December 31. Calculate the interest revenue, weighted-average accumulated expenditures, avoidable interest, and total interest cost to be capitalized during 2017. Interest revenue Weighted-average accumulated expenditures Avoidable interest Interest capitalized

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Answer 1

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Interest is capitalized for the period of manufacturing of capital asset: