Early in 2020, ACY Limited engaged a contractor to design and construct a new warehouse. The warehouse was completed and ready for use in early 2021. ACY Limited incurred the following expenditures...


Early in 2020, ACY Limited engaged a contractor to design and construct a new warehouse. The<br>warehouse was completed and ready for use in early 2021. ACY Limited incurred the following<br>expenditures for the construction.<br>March 1, 2020<br>$ 90,000<br>April 1, 2020<br>May 31, 2020<br>July 1, 2020<br>December 31, 2020<br>72,000<br>75,000<br>70,000<br>200,000<br>ACY Limited had the following debt outstanding on December 31, 2020.<br>1. 12%, 3-year note to finance the construction of this<br>warehouse, dated January 1, 2020, with interest payable<br>annually on December 31<br>2. 12%, 10-year bonds issued at par on December 31, 2015,<br>with interest payable annually on December 31<br>3. 9%, 3-year note payable, dated January 1, 2019, with<br>interest payable annually on December 31<br>S 150,000<br>400,000<br>200,000<br>Requirement:<br>A. Advise ACY Limited how to account for the interest incurred related to the warehouse in 2020.<br>Support your answers with detailed calculation.<br>

Extracted text: Early in 2020, ACY Limited engaged a contractor to design and construct a new warehouse. The warehouse was completed and ready for use in early 2021. ACY Limited incurred the following expenditures for the construction. March 1, 2020 $ 90,000 April 1, 2020 May 31, 2020 July 1, 2020 December 31, 2020 72,000 75,000 70,000 200,000 ACY Limited had the following debt outstanding on December 31, 2020. 1. 12%, 3-year note to finance the construction of this warehouse, dated January 1, 2020, with interest payable annually on December 31 2. 12%, 10-year bonds issued at par on December 31, 2015, with interest payable annually on December 31 3. 9%, 3-year note payable, dated January 1, 2019, with interest payable annually on December 31 S 150,000 400,000 200,000 Requirement: A. Advise ACY Limited how to account for the interest incurred related to the warehouse in 2020. Support your answers with detailed calculation.

Jun 10, 2022
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