Homework Answers
Note: january to december is assumed to be financial year.Add Answer to:
Question 1: Clinton Corp. contracted with a company to build a storage warehouse in Year 1....
Question 1) A company purchased land adjacent to its existing property to build a warehouse. The...
Question 1) A company purchased land adjacent to its existing property to build a warehouse. The company's maintenance crew and additional temporary employees built the warehouse. In addition, the company took out a $40,000 construction loan, which was repaid with a new loan after construction was completed. Which of the following statements is true? All costs associated with building the warehouse should be expensed as incurred. Materials costs should be capitalized to the building account, but all labor and interest...
Situation I On January 1, 2020, Kingbird, Inc. signed a fixed-price contract to have Builder Associates...
Situation I On January 1, 2020, Kingbird, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,471,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2020, to finance the construction cost, Kingbird borrowed $4,471,000 payable in 10 annual installments of $447,100, plus interest at the rate of 10%. During 2020, Kingbird made deposit and progress payments totaling $1,676,625 under the contract; the...
The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Temarisk,...
The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Temarisk, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,215,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Tamar k borrowed $4,215,000 payable in 10 annual stal mets of $421,500, plus interest at the rate of 10%. During 2017, Tamarisk...
Situation I On January 1, 2017, Tamarisk, Inc. signed a fixed-price contract to have Builder Associates...
Situation I On January 1, 2017, Tamarisk, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,215,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Tamansk borrowed $4,215 000 Payable in 10 annual installments of $421 500 plus interest at the rate of 10% During 2017 Tamarisk made deposit and progress Payments totaling S1 580,625 under...
Situation On January 1, 2020, Crane, Inc. signed a fixed-price contract to have Builder Associates construct...
Situation On January 1, 2020, Crane, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,160,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2020, to finance the construction cost, Crane borrowed $4,160,000 payable in 10 annual installments of $416,000, plus interest at the rate of 10%. During 2020, Crane made deposit and progress payments totaling $1,560,000 under the contract; the weighted...
The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Riverbed,...
The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Riverbed, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,491,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Riverbed borrowed $4,491,000 payable in 10 annual installments of $449,100, plus interest at the rate of 10% During 2017, Riverbed made deposit...
A. The storage building was self-constructed this year by Accounting Creations. The Company had t...
a. The storage building was self-constructed this year by Accounting Creations. The Company had their initial expenditure of $500,000 on January 1. They paid an additional $375,000 on May 1st, $250,000 on August 1st, and then the final payment of $150,000 on December 1st when the building was completed and occupancy occurred. The company has decided to use S/L method for depreciation. The storage building is estimated to have a life of 40 years and a salvage value of $78,000....
Exercise 10-10 The following three situations involve the capitalization of interest. Situation I major plant facility...
Exercise 10-10 The following three situations involve the capitalization of interest. Situation I major plant facility at a cost of $4,419,000. It was esti mated that it On January 1, 2017, Martinez, Inc. signed a fixed-price contract to have Builder Associates construct would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Martinez borrowed $4,419,000 payable in 10 annual installments of $441,900, plus interest at the rate of 10%. During 2017, Martinez...
A company constructs a building for its own use. Construction began on January 1 and ended...
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $500,000; March 31, $600,000; June 30, $400,000; October 30, $600,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $700,000. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and...
On July 1, 2020, Crane Construction Company Inc. contracted to build an office building for Gumbel...
On July 1, 2020, Crane Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000. On July 1, Crane estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. Contract costs incurred to date Estimated...
The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Temarisk, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,215,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Tamar k borrowed $4,215,000 payable in 10 annual stal mets of $421,500, plus interest at the rate of 10%. During 2017, Tamarisk...
Situation I On January 1, 2017, Tamarisk, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,215,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Tamansk borrowed $4,215 000 Payable in 10 annual installments of $421 500 plus interest at the rate of 10% During 2017 Tamarisk made deposit and progress Payments totaling S1 580,625 under...
Situation On January 1, 2020, Crane, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,160,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2020, to finance the construction cost, Crane borrowed $4,160,000 payable in 10 annual installments of $416,000, plus interest at the rate of 10%. During 2020, Crane made deposit and progress payments totaling $1,560,000 under the contract; the weighted...
The following three situations involve the capitalization of interest. Situation I On January 1, 2017, Riverbed, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,491,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Riverbed borrowed $4,491,000 payable in 10 annual installments of $449,100, plus interest at the rate of 10% During 2017, Riverbed made deposit...
Exercise 10-10 The following three situations involve the capitalization of interest. Situation I major plant facility at a cost of $4,419,000. It was esti mated that it On January 1, 2017, Martinez, Inc. signed a fixed-price contract to have Builder Associates construct would take 3 years to complete the project. Also on January 1, 2017, to finance the construction cost, Martinez borrowed $4,419,000 payable in 10 annual installments of $441,900, plus interest at the rate of 10%. During 2017, Martinez...
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $500,000; March 31, $600,000; June 30, $400,000; October 30, $600,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $700,000. The company's other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and...
On July 1, 2020, Crane Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000. On July 1, Crane estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. Contract costs incurred to date Estimated...
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