This study source was downloaded by 100000791436302 from CourseHero com on 03 28 2022 04 49 38 GMT 05 00 https www coursehero com file 22764520 Assignment5 Aisha Q1 On March 1 Mocl Co began construction of a small building The following expenditures were incurred for construction March 1 75 000 April 1 74 000 May 1 180 000 June 1 270 000 July 1 100 000 The building was completed and occupied on July 1 To help pay for construction 50 000 was borrowed on March 1 on a 12 three year note payable The only other debt outstanding during the year was a 500 000 10 note issued two years ago Instructions a Calculate the weighted average accumulated expenditures b Calculate avoidable interest capitalization Weighted average date expenditures period Accum expend March 1 75 000 4 12 25 000 April 1 74 000 3 12 18 500 May 1 180 000 2 12 30 000 June 1 270 00 1 12 22 500 July 1 100 000 0 0 96 000 Weighted average Avoidable Accum expend rate interest 50 000 12 6 000 46 000 10 4 600 96 000 10 600 Q2 Equipment that cost 80 000 and has accumulated depreciation of 43 000 is exchanged for equipment with a fair value of 32 000 and 8 000 cash is received The exchange has commercial substance Instructions a Show the calculation of the gain to be recognized from the exchange b Prepare the entry for the exchange This study source was downloaded by 100000791436302 from CourseHero com on 03 28 2022 04 49 38 GMT 05 00 https www coursehero com file 22764520 Assignment5 Aisha Q3 Presented below are the components related to an office building that Lockard Company is considering purchasing for 10 000 000 Component Useful Life Value Building structure 60 year life 5 400 000 Building engineering 30 year life 2 400 000 Building external works 30 year life 900 000 Instructions a Compute depreciation expense for 2010 assuming that Lockard uses component depreciation b Assume that the building engineering was replaced in 20 years at a cost of 2 600 000 Prepare the entry to record the replacement of the old component with the new component Q 1 a Capitalization Weighted average Date Expenditures Period Accum expend March 1 75 000 4 12 25 000 April 1 74 000 3 12 18 500 May 1 180 000 2 12 30 000 June 1 270 00 1 12 22 500 July 1 100 000 0 0 96 000 b Weighted average Avoidable Accum expend Rate Interest 50 000 0 12 6 000 46 000 0 10 4 600 96 000 10 600 Q 2 a Cost 80 000 Accumulated depreciation 43 000 Book value 37 000 Fair value 32 000 8 000 40 000 Gain 3 000 b Accumulated Depreciation 43 000 Equipment 32 000 Cash 8 000 Equipment 80 000 Gain on Disposal 3 000 This study source was downloaded by 100000791436302 from CourseHero com on 03 28 2022 04 49 38 GMT 05 00 https www coursehero com file 22764520 Assignment5 Aisha Powered by TCPDF www tcpdf org Q 3 a Component Depreciation Expense Building structure 5 400 000 60 90 000 Building engineering 2 400 000 30 80 000 Building external works 900 000 30 30 000 200 000 b Building engineering 2 600 000 Accumulated Depreciation 2 400 000 x 20 30 1 600 000 Loss on Disposal of Plant Assets 800 000 Building Engineering 2 400 000 Cash 2 600 000 Aisha AlThekrallah 130044526