91 mathison company exchanged a worn out tractor that had cost 30 000 and was half d 4313830

91 mathison company exchanged a worn out tractor that had cost 30 000 and was half d 4313830

91.Mathison Company exchanged a worn-out tractor that had cost $30,000 and was half depreciated for a new tractor with a fair value of $12,000. Mathison paid an additional $4,500 cash. The transaction lacked commercial substance.

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Required:

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Compute the amount at which Mathison should record the new tractor.

92.Assuming that the effects of interest capitalization are material, calculate the amount of interest costs to be capitalized by Matthew Corporation in 2016 in relation to the followingseparate events:

a.

On January 1, Matthew began construction for a new storage building for its own use. Expenditures incurred evenly throughout the year totaled $900,000. Matthew borrowed $1,000,000 specifically for construction of the storage building at an annual interest rate of 6%.

b.

Inventories costing $200,000 were routinely manufactured during the year. Matthew borrowed $200,000 at 8% to finance inventory-related costs.

c.

On September 1, Matthew began construction of a custom-designed machine to the specifications of a customer. As of December 31, $200,000 of materials, labor, and overhead have been assigned to the machine. Those costs were incurred evenly throughout the period September 1 through December 31. To finance construction, $230,000 was borrowed at a 9% interest rate.

93.On January 3, 2016, Mercury Company began self-constructing an asset that qualified for interest capitalization. On January 5, Mercury borrowed $300,000 on an 8% construction loan. In addition, Mercury had $400,000 of 6% notes payable and $600,000 of 9% bonds payable outstanding. By December 31, expenditures (occurring evenly throughout the year) of $900,000 had been made on the asset. Investment of unused funds during the year yielded $1,200 of interest revenue.

Required:

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Compute the amount of interest that should be capitalized during 2016.

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