Buildings

BEGINNING
DEPRECIATION
DISPOSAL
ENDING
Buildings:
Depreciation Expense (600,000/10*3/12)
Accumulated Depreciation
(23,422,469*6%)
Machinery & Equipment:
Depreciation Expense (600,000/10*3/12)
Accumulated Depreciation
(update from Jan.1 - April 1)
Cash
Accumulated Depreciation (600,000/10*5)
Loss on Fire
Machinery and Equipment

6,577,531
1,405,348
7,982,879

Accumulated Depreciation
Machinery &
Equipment
6,500,000
2,595,000
(300,000)
8,795,000

1,405,348
1,405,348

15,000
15,000

200,000
300,000
100,000
600,000

Machinery and Equipment

Cash

7,800,000

Depreciation Expense
Accumulated Depreciation
[OLD = 22,500,000 - 600,000] /10]
[NEW = 7,800,000/10 * 6/12]

2,580,000

7,800,000

2,580,000
2,190,000
390,000

mulated Depreciation
Delivery
Leasehold
Equipment
Improvement
2,400,000
510,000
450,000
(270,000)
2,640,000
450,000
Delivery Equipment:
Delivery Equipment (new)
Accumulated Depreciation (450,000-180,000)
Loss on Sale
Cash
Delivery Equipment (old)
Depreciation Expense
Accumulated Depreciation
(OLD = 400,000 - 90,000)
(NEW = 600,000 * 5/15)

600,000
270,000
80,000

510,000
310,000
200,000

Leasehold Improvements:
Depreciation Expense
450,000
Accumulated Depreciation
(4,500,000/80*8)
Useful life = 120 months (10 years * 12)
Lease Term = 80 months (May 1, 2014 - December 31, 2020)
(Whichever is shorter)

500,000
450,000

510,000

450,000

31, 2020)

Additional Scenario:
How much is the cost of the building on Decebmer 31, 2014?
(assuming it was completed in December 31, 2014)

2013
Specific

Average
Expenditures
600,000

%
10%

Interest
60,000

1,600,000
General
1,000,000
Capitalized Borrowing Cost
Average Expenditures
1/1/2013
800,000
12/12
4/1/2013 1,000,000
9/12
1/1/2013
600,000
1/12

2014
Specific

12%

120,000
180,000

800,000
750,000
50,000
1,600,000
Average
Expenditures
600,000

%
10%

Interest
60,000

3,580,000
General
2,980,000
Capitalized Borrowing Cost

1/1/2014
3/1/2014

Average Expenditures
2,580,000
12/12
1,200,000
10/12

12%

357,600
417,600

2,580,000
1,000,000
3,580,000

2013 - Construction Cost

2013 - Capitalized Borrowing Cost
2014 - Construction Cost
2014 - Capitalized Borrowing Cost
Building (12/31/14)

2,400,000
180,000
1,200,000
417,600
4,197,600

Item 1
How much is the cost of the building on June 30, 2014?
(assuming it was completed in June 30, 2014)

2013
Specific

Average
Expenditures
600,000

%
10%

Interest
60,000

12%

120,000
180,000

1,600,000
General
1,000,000
*Capitalized Borrowing Cost
Average Expenditures
1/1/2013
800,000
12/12
4/1/2013 1,000,000
9/12
1/1/2013
600,000
1/12

2014
Specific

800,000
750,000
50,000
1,600,000
Average
Expenditures
600,000

%
5%

Interest
30,000

3,380,000
General
2,780,000
Capitalized Borrowing Cost

1/1/2014
3/1/2014

Average Expenditures
2,580,000
6/6
1,200,000
4/6

6%

166,800
196,800

2,580,000
800,000
3,380,000

2013 - Construction Cost

2013 - Capitalized Borrowing Cost
2014 - Construction Cost
2014 - Capitalized Borrowing Cost
Building (6/30/14)

2,400,000
180,000
1,200,000
196,800
3,976,800

Item 2
How much is the cost of the building on Decebmer 31, 2014?
(assuming that the specific construction loan was also used for general purposes)

2013
General
General

600,000
5,000,000
5,600,000
Average Rate

10%
12%

60,000
600,000
660,000

11.79%

1/1/2013
4/1/2013
1/1/2013

Average Expenditures
800,000
12/12
1,000,000
9/12
600,000
1/12

1/1/2014
3/1/2014

Average Expenditures
2,588,640
12/12
1,200,000
10/12

800,000
750,000
50,000
1,600,000

2,588,640
1,000,000
3,588,640

2013 - Construction Cost

2013 - Capitalized Borrowing Cost
2014 - Construction Cost
2014 - Capitalized Borrowing Cost
Building (12/31/14)

31, 2014?
so used for general purposes)

*Capitalized Borrowing Cost

188,640

*Capitalized Borrowing Cost

423,101

2,400,000
188,640
1,200,000
423,101
4,211,741