A-1 Computing and Recording Interest CapitalizationThe following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January of next year. The constructionproject is for a building intended for the company's own use. The capital expenditure on January 1 of the current year is for the purchase of land for thebuilding site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year.Capital Expenditures for Current YearDateActual ExpendituresMINUTJan. 1Mar, 31June 30Nov. 30DebtNote payableNote payableOutstanding Debt in Current YearBond payableNote payable1.$66,0001,980,0003,960,0001,980,000Debt Amount Interest Rate$2,200,0001,760,0004,400,0001,100,000Compute Interest to Capitalize and Expense Journal Entry in Year 1c. Assume that the project is completed on January 1 of the next year.(1) Prepare the entry to transfer costs from construction in process to property and equipment.(2) Prepare the annual entry for depreciation for that next year, assuming that the building has a useful life of 30 years with no salvage value, and that thecompany uses the straight-line depreciation method.Construction in ProcessDepreciation Expense10%9%Account NameProperty and EquipmentTo record cost transferAccount NameAccumulated DepreciationTo record annual depreciationDr.Dr.00Journal Entries in Year 200Cr.Cr.0X0x0x0x

Borrowing costs that are directly attributable to the acquisition, construction, and production of…

The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January of next year. The construction project is for a building intended for the company's own use. The capital expenditure on January 1 of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year. Capital Expenditures for Current Year Date Actual Expenditures Jan. 1 Mar, 31 June 30 Nov. 30 $66,000 1,980,000 3,960,000 1,980,000

The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January of next year. The construction project is for a building intended for the company's own use. The capital expenditure on January 1 of the current year is for the purchase of land for the building site. No new construction loans were opened for the project during the year. All debt was outstanding for the full year. Capital Expenditures for Current Year Date Actual Expenditures Jan. 1 Mar, 31 June 30 Nov. 30 $66,000 1,980,000 3,960,000 1,980,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 18E

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