91影视

As with other interests, capitalized interest accumulates on an asset or loan, but it is not immediately recognized as an expense on the income statement. The accrued interest is deducted from the asset's value on the income statement, which includes the interest on its total value on the balance sheet.

$80,000 is the amount Oksana Baiul should declare as capitalized interest on 12/31/17. The amount of interest that can be capitalized is:

$\begin{array}{rcl}\mathbf{Avoidable}\mathbf{}\mathbf{Interest}& \mathbf{=}& \mathbf{Weighted}\mathbf{-}\mathbf{Accumulated}\mathbf{}\mathbf{expenditure}\mathbf{脳}\mathbf{Interest}\mathbf{}\mathbf{rate}\end{array}$

As Oksana Baiul has outstanding debt for the building project over the weighted-average cumulative expenditures of $800,000, the interest rate is 10%. As a result, the avoidable interest is $80,000, less than the actual interest.

$\begin{array}{rcl}\mathbf{Avoidable}\mathbf{}\mathbf{Interest}& \mathbf{=}& \mathbf{Weighted}\mathbf{-}\mathbf{Accumulated}\mathbf{}\mathbf{expenditure}\mathbf{脳}\mathbf{Interest}\mathbf{}\mathbf{rate}\\ & \mathbf{=}& \mathbf{\$}\mathbf{800}\mathbf{,}\mathbf{000}\mathbf{脳}\mathbf{0}\mathbf{.}\mathbf{10}\\ & \mathbf{=}& \mathbf{\$}\mathbf{80}\mathbf{,}\mathbf{000}\end{array}$

Finally, the interest generated of $250,000 is immaterial to the situation because interest paid on the unexpended portion of the loan is not to be deducted against the amount eligible for capitalization.

Total interest expenses must be capitalized, which costs $39,000. Assets developed for an enterprise's use and assets intended for sale or lease that are generated as distinct projects are identified as assets that qualify for interest capitalization under GAAP. Interest capitalization does not apply to inventories consistently produced in big numbers regularly. Only $30,000 and $9,000 are capitalized as a result.

$385,000鈥攖he goal is to figure out how much interest should be capitalized on the financial statements as of April 30, 2018. The criteria of GAAP are met:

1. The asset has been purchased,
2. The actions required to prepare the asset for its planned use are underway, and
3. Interest costs are being incurred. The amount to be capitalized is calculated by multiplying the weighted-average amount of cumulative expenditures for the asset during the period by an interest rate.

The weighted-average amount of expenditures for the year ending April 30, 2018, is $3,500,000 ($7,000,000/2). As a result, the amount of interest that must be capitalized is $385,000 ($3,500,000 X 11%). The entire amount of interest cost to be capitalized at any given time must not exceed the total amount of interest cost incurred by the business. (The total amount of interest is $1,100,000.)

Finally, since interest collected on the unexpended portion of the loan is not to be adjusted against the amount eligible for capitalization, the $650,000 in interest generated is irrelevant to the point addressed in this problem.