Question

Compute the weighted average accumulated expenditures on Crane's new building during the capitalization period. Weighted-Average Accumulated Expenditures $ e Textbook and Media Compute the avoidable interest on Crane's new building. (Round intermediate percentage calculation to 1 decimal place, e.g. 15.6% and final answer to O decimal places, e.g. 5,125.) Avoidable Interest $ e Textbook and Media Some interest cost of Crane Inc. is capitalized for the year ended May 31, 2021. Compute the amount of each items that must be disclosed in Crane's financial statements. Total actual interest cost $ Total interest capitalized $ Total interest expensed $

Answer 1

Solution 1:

Weighted-Average accumulated expenditure
Date	Amount	Capitalization period	Weighted Average Accumulated Expenditures
30 July 2020	$9,90,000	10/12	$8,25,000
30 January 2020	$16,50,000	4/12	$5,50,000
30 May 2020	$17,60,000	0/12	$0
Total	$44,00,000		$13,75,000

Solution 2:

Weighted average interest rate of all debt
Debt	Amount	Interest rate	Interest amount
10% Note	$22,00,000	10%	$2,20,000
12% Bond	$33,00,000	12%	$3,96,000
Totals	$55,00,000		$6,16,000
Weighted average rate (total interets/ total debt)		11.20%

Avoidable Interest = $1375000 *11.20% = $154,000

Solution 3:

Total Actual Interest Cost = $616,000

Total Interest Capitalized = $154,000

Total interest Expensed = $616000 - $154000 =  $462,000