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Date Payment
June 01, 2017 $4,800,000
August 31, 2017 7,200,000
December 31, 2017 6,000,000
In order to help finance the construction, Dobbs issued the following during
2017:
1. $4,000,000 of 10-year, 9% bonds payable, issued at par on May 31, 2017,
with interest payable annually on May 31.
2. 1,000,000 shares of no-par common stock, issued at $10 per share on
October 1, 2017. In addition to the 9% bonds payable, the only debt
outstanding during 2017 was a $1,000,000, 12% note payable dated January
1, 2008 and due January 1, 2018, with interest payable annually on January
1.
Instructions
Compute the amounts of each of the following (show computations):
a. Weighted-average accumulated expenditures qualifying for capitalization of
interest cost.
b. Avoidable interest incurred during 2017.
c. Total amount of interest cost to be capitalized during 2017.
Cost $7,000,000
Accumlated depreciation to date ,800,000
Expected future net cash flows 5,000,000
Fair value 3,400,000
Assume that Finley will continue to use this asset in the future. As of
December 31, 2012, the equipment has a remaining useful life of 4 years.
Instruction:
a. Prepare the journal entry (if any) to record the impairment of the asset at
December 31, 2012.
b. Prepare the journal entry to record depreciation expense for 2013.
c. The fair value of the equipment at December 31, 2013 is $4,100,000.
Prepare the journal entry (if any) necessary to record this increase in fair
value.