Question
On January 2, 2012, Dessin Ltd began construction of a new citrus processing plant. The automated...
On January 2, 2012, Dessin Ltd began construction of a new
citrus processing plant. The automated plant was finished and ready
for use on December 31, 2012. Expenditures for the construction
were as follows:
January 2, 2012 $150,000
March 1, 2012 700,000
September 1, 2012 500,000
December 1, 2012 180,000
December 31, 2012 200,000
Dessin Ltd borrowed $500,000 on a construction loan at 10% interest
on January 2, 2012. This loan was outstanding during the
construction period. The company also had $3,500,000 in 8% bonds
outstanding and a 5-year loan of 1,200,000 at 11% outstanding in
2012 and 2013. a) What were the weighted-average accumulated
expenditures for 2012? b) What is the weighted-average interest
rate used for interest capitalization purposes in 2012? c) What is
the avoidable interest for the company in 2012? d) What is the
actual interest for the company in 2012? e) What is the total
amount of the interest capitalized for 2012? f) What is the total
amount of the interest expensed for 2012? g) Show your
computations!
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