#### Details of this Paper

##### GHW 3 PP&E Turner Co. owned a warehouse and then decided to build a new automated racking system in the warehouse

**Description**

solution

**Question**

Turner Co. owned a warehouse and then decided to build a new automated racking system in the warehouse. They began construction of the system on January 1, 2012. The project was completed on December 31, 2012 and placed into service on 1/1/2013. Payments to the contractors were made as follows;January 1, 2012 $ 50,000;April 1, 2012 $590,000;October 1, 2012 $ 270,000;Total $910,000;On April 1, 2012, the company obtained a $480,000, 6% annual interest rate construction loan. The loan was outstanding for the entire construction period.;The other interest bearing debt of the company included two long-term notes of $180,000 and $120,000 with interest rates of 4% and 5% respectively. The loans were outstanding for the entire year.;To save you time- I am going to give you avoidable interest for these facts. (but you might want to try to compute it to see if you get it right, too!) Avoidable interest for 2012 is $32,320.;The racking system has an estimated useful life of 10 years and an estimated residual value of $100,000. Turner computes depreciation for short years using the nearest full month as the convention. Turner uses the double declining balance method.;1. Assume all interest payments for 2012 are made in cash on December 31, 2012. What is the total interest paid in cash by Turner on 12/31/2012? (This is ?actual interest?).;You type 1. #put your final answer here# (then show your work after under that);2. What is the amount of interest capitalized for 2012?;You type 2. #put your final answer here# (then show your work after under that);3. How much interest expense will Turner report on its income statement for 2012?;You type 3. #put your final answer here# (then show your work after under that);4. What is acquisition cost for the racking system based on the information we have?;You type 4. #put your final answer here# (then show your work after under that);*************************************************************************;Avoidableinterest;1)weighted average expenditures;1-Jan 50,000 1 50,000;1-Apr 590,000 0.75 442,500;1-0ct 270,000 0.25' 67,500;W.A.Exp. 910,000 560,000;Intereston W:A. Exp;Specific 480,000 0.06 28,800;Other 80,000 0.044. * 3,520;560,000 32,320;*wtd average rate computed below;180,000 0.04 7,200;120,000 0.05 6,000;300,000 13,200;0.044 *;*************************************************************************;GHW 3 PP&E;Pleasetype yourresponses into the textsubmissionssectionofthe AssignmentinBlackboardfollowing thedirections here. Notethisis differentthatthe approachfor Homework2. Ifyou do notshowyourworkasrequested,I cannotgivefollow-through credit.;TurnerCo. owneda warehouse and then decidedto builda new automatedracking systemin the warehouse.Theybegan construction of the systemon January1, 2012.The projectwas completed on December31,2012 andplacedintoservice on1/1/2013.Payments tothecontractorswere made asfollows;January1, 2012;$ 50,000;April1, 2012;$590,000;October1, 2012;$ 270,000;Total;$910,000;On April1, 2012, the companyobtained a$480,000, 6% annualinterestrateconstructionloan.Theloan was outstandingfortheentire construction period.;The otherinterestbearingdebtofthe companyincluded two long-term notes of$180,000 and $120,000 withinterestrates of 4%and5%respectively.The loans were outstandingforthe entire year.;To save you time-Iamgoingto give you avoidable interest forthesefacts.(butyou mightwanttotrytocompute ittoseeifyou get itright, too!)Avoidable interestfor2012 is $32,320.;The rackingsystemhas an estimated usefullife of 10years andan estimated residualvalue of $100,000. Turnercomputes depreciation forshortyears usingthe nearestfullmonth astheconvention.Turnerusesthedouble decliningbalance method.;1. Assume allinterestpayments for 2012 are made in cash on December 31, 2012.Whatisthetotalinterest paid incash byTurneron 12/31/2012?(Thisis?actual interest?).;You type 1. #putyourfinalanswerhere#(then show yourworkafterunderthat);2. Whatistheamountofinterestcapitalizedfor2012?;You type 2. #putyourfinalanswerhere#(then show yourworkafterunderthat);3. How much interestexpensewillTurnerreporton its income statement for2012?You type 3. #putyourfinalanswerhere#(then show yourworkafterunderthat);4. Whatisacquisitioncostfortheracking systembased on theinformation we have?;You type 4. #putyourfinalanswerhere#(then show yourworkafterunderthat);5. Complete the depreciationschedulebelow (like Igave you in class-fillin everyblankcell)thatshowsthedepreciation expense, accumulated depreciation andnetbookvaluefortherackingsystemevery yearforthefirst3 years from2013-2015.;Year;Mo.;Cost;Residual;Depreciable;Cost;Depreciation;expense;AccumulatedDepreciation;Netbookvalue;2013;12;5a.;5b.;5c.;2014;12;5d;5e;5f;2015;12;5g;5h;5i;Type youranswersinthis format, please.(##### is yourfinalanswer)5a ##### (and show yourworkforthe expense computation)5b######;5c######;5d######(andshow yourworkforthe expense computation)5e######;5f######;5g######(andshow yourworkforthe expense computation)5h######;5i######;6. Assume thatafterthedepreciation adjustmentis madein 2015, thatthecompanydetermines the rackingsystemis technologicallyobsoleteandthatthe future cash flowsfromthesystemarelimited totheamountitcould be soldfor.Theyestimate thatpossible sellingvalue to be $200,000at12/31/2015. Whatadditionaladjustingentry wouldTurnerneed to record? Give me the entryand show anycalculations below the entry.;You cantype theentryas;DR. Account name ?..$######;CR. Accountname??????.$######;No needto befancy-justindicate debitorcreditin frontofeach lineforme.

Paper#35269 | Written in 18-Jul-2015

Price :*$27*