Exercise 10–22
Average accumulated expenditures:
Interest capitalized:
* Weighted-average rate of all other debt:
Exercise 10–23
Average accumulated expenditures for 2018:
January 1, 2018 $500,000 x12/12= $ 500,000
March 1, 2018 600,000 x10/12= 500,000
Interest capitalized:
Exercise 10–24
Average accumulated expenditures for 2018:
January 1, 2018 $ 600,000 × 12/12 = $ 600,000
March 31, 2018 1,200,000 × 9/12 =900,000
Interest capitalized:
$2,050,000
– 1 ,500,000 (construction loan)
x 8.0% = $120,000
* Weighted-average rate of all other debt:
$5,000,000 × 12% =$600,000
Exercise 10–25
Average accumulated expenditures for 2018:
July 1, 2018 $ 400,000 × 6/6 = $ 400,000
Interest capitalized in 2018:
* Weighted-average rate of all debt:
$ 2,000,000 × 8% = $160,000
Average accumulated expenditures for 2019:
Interest capitalized in 2019:
Exercise 10–26
To expense R&D costs incorrectly capitalized.
……………………………………………………………………Patent
Research and development expenditures:
Basic research to develop the technology $2,000,000
To capitalize cost of equipment incorrectly capitalized as patent.
……………………………………………………………………Patent
To record depreciation on equipment used in R&D projects.
…………………….Accumulated depreciation—equipment
Exercise 10–27
Research and development expense:
Salaries and wages for lab research $ 400,000
Materials used in R&D projects 200,000
The patent filing and legal costs are capitalized as the cost of the patent. The
salaries, wages, and supplies for R&D performed for another company are
included as inventory and expensed as cost of goods sold using either the
completed contract or percentage-of-completion method.
Exercise 10–28
Requirement 1
According to U.S. GAAP, the following costs would be expensed as R&D:
Research for new formulas $2,425,000
The legal and filing fees are capitalized as an intangible asset.
Requirement 2
According to IFRS, only the $2,425,000 in research costs would be expensed
Exercise 10–29
Requirement 1
NXS should expense only the research expenditures:
Salaries and wages for basic research $ 3,450,000
Requirement 2
Both the development costs incurred after feasibility is established and the
legal and filing fees are capitalized as intangible assets and amortized.
Exercise 10–30
List A List B
f 1. Property, plant, and a. Exclusive right to display a word, a
symbol,
and equipment or an emblem.
d 2. Land improvements b. Exclusive right to benefit from a creative
work.
i 3. Capitalize c. Assets that represent rights.
Exercise 10–31
Requirement 1
……………………………………………………………………..Cash
Requirement 2
(1) Percentage-of-revenue method:
(2) Straight-line method:
The percentage-of-revenue method is used since it produces the greater
Requirement 3