Question Details

Which of the following journal entries would Huang make to record the exchange 



1.	During 2011, Chan Company incurred average accumulated expenditures of HK$3,200,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2011 was a HK$5,000,000, 7.5%, 6-year note payable dated July 1, 2010. What is the amount of interest that should be capitalized by Chan during 2011?
a.	HK$0.
b.	HK$120,000.
c.	HK$240,000.
d.	HK$375,000.

2.	During 2011, Churchill Inc. constructed assets costing £4,200,000. The weighted-average accumulated expenditures on these assets during the year was £2,600,000. Churchill took out a construction loan of £4,000,000 was borrowed at 7% on January 1, 2011, and funds not needed for construction were temporarily invested in short-term securities, yielding £30,000 in interest revenue. Other than the construction loan, the only other debt outstanding during the year was a £2,000,000, 5-year, 9% note payable dated January 1, 2007. What is the amount of interest that should be capitalized by Churchill during 2011?
a.	£152,000.
b.	£182,000.
c.	£280,000.
d.	£330,000.

3.	On January 1, 2011, Le Pavillion Co began construction on assets which cost CHF2,900,000. The weighted-average accumulated expenditures on these assets during 2011 was CHF1,900,000. To help pay for construction, CHF1,500,000 was borrowed at 9.5% on January 1, 2011. Funds not needed for construction were temporarily invested in short-term securities, earning CHF79,000 in interest revenue during the year. Other than the construction loan, the only other debt outstanding during the year was a CHF2,750,000, 10-year, 12% note payable dated May 1, 2008. What is the amount of interest that should be capitalized by Le Pavillion during 2011?
a.	CHF101,500.
b.	CHF111,500.
c.	CHF180,500.
d.	CHF190,500.

4.	During 2011, Bella Corporation constructed assets costing CHF4,215,000. The weighted-average accumulated expenditures on these assets during 2011 was CHF3,900,000. Bella borrowed CHF2,000,000 at 7.5% on January 1, 2011. Funds not needed for construction were temporarily invested in short-term securities, and earned CHF59,000 in interest revenue. In addition to the construction loan, Bella had two other notes outstanding during the year: (1) a CHF1,500,000, 10-year, 10% note payable dated October 1, 2009, and (2) a CHF1,000,000, 8% note payable dated November 2, 2010. What is the amount of interest that should be capitalized by Bella during 2011?
a.	CHF328,800.
b.	CHF297,500.
c.	CHF273,000.
d.	CHF265,800.

 
5.	In an exchange with commercial substance, Huang Company traded equipment with a cost of ¥8,200,000 and book value of ¥3,120,000 and gave ¥4,698,000 cash. The old machine had a fair value of ¥2,960,000. Which of the following journal entries would Huang make to record the exchange ?

a.	Equipment	7,658,000
	Loss on Exchange	160,000
	Accumulated Depreciation	5,080,000
	Equipment	8,200,000
	Cash	4,698,000
b.	Equipment	8,208,000
	Equipment	8,200,000
	Cash	8,000
c.	Accumulated Depreciation	5,080,000
	Equipment	7,398,000
		Equipment	8,200,000
		Cash	4,698,000
d.	Equipment	7,658,000
Accumulated Depreciation           542,000
	Equipment	8,200,000



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