Accounting Essay
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Quiz 21.  Largo Inc. ended 20×5 by capitalizing interest of $32,000 on the construction of equipment for its own use.  During 20×5 Largo also spent $560,000 on qualifying construction expenditures.  The 12/31/x5 balance in construction in progress therefore is $592,000.  In 20×6 Largo spent $420,000 more in qualifying construction expenditures evenly throughout the year.  The equipment is not yet complete as of 12/31/x6.  Compute AAE for 20×6 for the purpose of capitalizing interest for 20×6.a.  1,012,000b.     770,000*c.     802,000d.     210,000e.     790,000592,000 + 420,000/2 = 802,0001.  Self-Made Inc. completed the construction of its own warehouse at the end of year 1.  Total costs incurred are as follows:____ Materials, $20,000____ Labor, 60,000____ Overhead, 40,000____ Capitalized interest, 25,000In addition to the above information, the firm signed a mortgage note with a one year term on 1/1/year 2.  $10,000 of interest was incurred during year 2 on that note which was then retired at the end of year 2.  The market value of the building was $210,000 upon completion at the end of year 1.  What is the final capitalized amount for the warehouse, at 12/31/year 1?

*a.  145,000b.  210,000c.  155,000   d.  120,000e.    80,00020,000 + 60,000 + 40,000 + 25,000 = 145,000 < 210,000 (so no loss).  The 10,000 interest after the building is complete is expensed.1.  In 20x5 a firm capitalized $67,000 of software development costs for a new product.  20x5 is the first year the firm marketed the product;  amortization of $17,000 was recorded at the end of 20x5.  During 20x6 the firm reported sales of $230,000 for the product and estimates (at year-end) that future sale will total $330,000 over the remaining product life of two years.  Compute amortization of software development costs for 20x6.*a.  20,536b.  16,667c.  25,000d.  34,849e.  18,56250,000 is the bv of capitalized sw costs at the beginning of 20x6 (67,000 – 17,000)The 2 amort amounts for 20x6 are:Based on years:  50,000(1/3) = SL amortization = 16,667Based on revenue:  50,000[230,000/(230,000 + 330,000)] = revenue amortization = 20,536The largest of the 2 is recognized each year.1.  At the beginning of 20x4, Quell began constructing technical equipment for its own use.  Debt outstanding the entire year:___ 5%, $40,000 loan to finance the construction of the equipment

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Final Capitalized Amount And End Of Year. (June 15, 2021). Retrieved from https://www.freeessays.education/final-capitalized-amount-and-end-of-year-essay/