Alpesh On January 1, 2024, the Highlands Company began construction on a new manufacturing facility for its own use. The building wascompleted in 2025. The company borrowed $1,700,000 at 9% on January 1 to help finance the construction. In addition to theconstruction loan, Highlands had the following debt outstanding throughout 2024:$6,000,000, 14% bonds$4,000,000, 9% long-term noteConstruction expenditures incurred during 2024 were as follows:January 1March 31June 30September 30December 31Required:$ 620,0001,220,000824,000620,000420,000Calculate the amount of interest capitalized for 2024 using the specific interest method.Note: Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be enteredas 12.3%).DateJanuary 1March 31June 30ExpenditureWeightAverageXXXSeptember 30XDecember 31Accumulated expenditure$0=$AmountInterestRateCapitalizedInterestAverage accumulated expendituresS0X%=$x%=S00

Calculating Interest Capitalized for 2024 (Specific Interest Method)We need to follow these steps to…

Answered: On January 1, 2024, the Highlands…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 6PB

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On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
On January 1, 2024, the company obtained a $3 million construction loan with a 11% 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 $4,800,000 and $6,800,000 with interest rates of 8% and 10%, 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.
Thornton Industries began construction of a warehouse on July 1, 2018. The project was completed on March 31,2019. No new loans were required to fund construction. Thornton does have the following two interest-bearingliabilities that were outstanding throughout the construction period:$2,000,000, 8% note$8,000,000, 4% bondsConstruction expenditures incurred were as follows:July 1, 2018 $400,000September 30, 2018 600,000November 30, 2018 600,000January 30, 2019 540,000The company’s fiscal year-end is December 31.Required:Calculate the amount of interest capitalized for 2018 and 2019.
Hawkins Corporation began construction of a motel on March 31, 2021. The project was completed on April 30, 2022. No new loans were required to fund construction. Hawkins does have the following two interest-bearing liabilities that were outstanding throughout the construction period:$5,100,000, 6% note$14,540,000, 10% bondsConstruction expenditures incurred were as follows: March 31, 2021 $ 3,910,000 June 30, 2021 5,910,000 November 30, 2021 1,782,000 February 28, 2022 2,910,000 The company’s fiscal year-end is December 31.Required:Calculate the amount of interest capitalized for 2021 and 2022. (Round weighted average interest rate to 2 decimal places and final answers to the nearest whole dollar.)
On January 1, 2014, ENERVATE TO WEAKEN Company had the following borrowings made for general purposes and a part of the proceeds was used to finance the construction of a qualifying asset. 12% short-term note-P40,000,000 14% bank loan (3-year)- 72,000,000 16% note payable (5-year)- 88,000,000 The construction of the qualifying asset was started on immediately and completed on June 30, 2015 and expenditures incurred on the qualifying asset were as follows: Jan. 1 P19,200,000 Mar. 31 8,800,000 July 30 14,000,000 March 31 21,600,000 June 30 1,200,000 How much is the cost of the new constructed building?
On December 31, 2024, L Incorporated had a $3,200,000 note payable outstanding, due July 31, 2025. L borrowed the money to finance construction of a new plant. L planned to refinance the note by issuing long-term bonds. Because L temporarily had excess cash, it prepaid $670,000 of the note on January 23, 2025. In February 2025, L completed a $4,700,000 bond offering. L will use the bond offering proceeds to repay the note payable at its maturity and to pay construction costs during 2025. On March 13, 2025, L issued its 2024 financial statements. What amount of the note payable should L include in the current liabilities section of its December 31, 2024, balance sheet? Multiple Choice$3,200,000$670,000$0$2,530,000
Dean Company has P2,000,000 of note payable due June 15, 2022. At the financial statement date of December 31, 2021, Dean signed an agreement to borrow up to 2,000,0000 to refinance the note payable on a long-term basis. The financing agreement called for borrowing not to exceed 80% of the value of the collateral Dean was providing. On December 31, 2021, the value of the collateral was P3,000,000. Under the existing loan facility, Dean has the discretion to refinance or roll over the note payable for at least twelve months after the balance sheet date. In the December 31, 2021 balance sheet, what amount of the note payable should Dean report as non-current liability?
On December 31, 2024, L Incorporated had a $3,000,000 note payable outstanding, due July 31, 2025. L borrowed the money to finance construction of a new plant. L planned to refinance the note by issuing long-term bonds. Because L temporarily had excess cash, it prepaid $650,000 of the note on January 23, 2025. In February 2025, L completed a $4,500,000 bond offering. L will use the bond offering proceeds to repay the note payable at its maturity and to pay construction costs during 2025. On March 13, 2025, L issued its 2024 financial statements. What amount of the note payable should L include in the current liabilities section of its December 31, 2024, balance sheet? Multiple Choice A. $0 B. $650,000 C. $2,350,000 D. $3,000,000 Please don't provide answer in image format thank you
30. Dear company has a 2,400,000 note payable due June 30, 2019. On December 31, 2018, the entity signed an agreement to borrow up to 2,400,000 to refinance the note payable on a long term basis. The financing agreement called for borrowing not to exceed 80% of the value of the collateral the entity was providing. On December 31, 2018, the value of the collateral was 1,800,000. On December 31, 2018, what amount of the note payable should be reported as current liabilities?
3 million of 4% notes are due on May 31, 2022. A debt covenant requires Newman to maintain current assets at least equal to 194% of its current liabilities. On December 31, 2021, Newman is in violation of this covenant. Newman obtained a waiver from National City Bank until June 2022, having convinced the bank that the company’s normal 2 to 1 ratio of current assets to current liabilities will be reestablished during the first half of 2022. Current or noncurrent liability and amount?
On January 1, 2022, Paulding Company, a calendar-year company, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2022, is Current liabilities, $1,000,000. Long-term debt, $1,000,000. Current liabilities, $250,000; Long-term Debt, $750,000. Current liabilities, $750,000; Long-term Debt, $250,000.
VKS Bank loaned P5,000,000 to IntAcc1 Company on January 1, 2018. The terms of the loan require principal payments of P1,000,000 each year on December 31 for 5 years plus interest at 8%. The first principal and interest payment is due on December 31, 2018. IntAcc1 Company made the required payments during 2018 and 2019. However, during 2020 IntAcc1 Company began to experience financial difficulties and was not able to pay the next installment of principal and interest, this required VKS to reassess the collectibility of the loan. On December 31, 2021, Sinopharm determined that the remaining principal payment will be collected starting December 31, 2022 but the collection of the interest is unlikely. Assume that VKS accrued interest on December 31, 2020 but did not continue to accrue interest because of its uncollectibillity. Use two-decimal places for PV factors. What is the loan impairment loss on December 31, 2021?

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