Question

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 average amount of accumulated expenditures was $832,000 for the year. The excess borrowed funds were invested in short-term securities, from which Crane realized investment income of $252,200. What amount should Crane report as capitalized interest at December 31, 2020? Capitalized interest $ e Textbook and Media

Answer 1

Page No 0 Ansulent situation i Capitalized Interest: Leighted average accumulated experişe = $832,000 Intoudt rate - 10% capitalized Intrest a weighted average accumulated expenseo X intrestrate = 832,000 X 10%. 3 83200 Capitalized Intrest - $82200 Situation I i . Total amount of interest costs to be capitalized in Total amount of intrest cost to be capitalized = $31,490 +8390

Page not = $ 39880 Total amount of interest Coşte to Capitalized = $ 39880 Intrest on manufacturing inventory is not Capitalized. Situation in Capitali žed intrest on Waterway's firmancial Statement bileighted average accumulated expenşeş = $6938400 = $ 3469 200 Intrest rate -11% Capitalized intrest on waterway's financial = 3469200 statement X 117. - 346 QOO 01 = $381612 capitalized intreston Waterwaya financial Statement = $381612