Fulsom Cobegan Construction of a New Factory at the Beginning of of 2016.At

question 51

Essay

Fulsom Co.began construction of a new factory at the beginning of 2016.At the end of the year, construction was completed, and construction costs totaled $200,000.Fulsom borrowed $180,000 at the beginning of 2016 to finance the construction and repaid the loan at the end of 2016.The interest rate on the loan was 9%.Determine the following amounts. A. The actual interest incurred on the construction loan during 2016 .
B. The interest to be capitalized for 2016 .
C. The total cost of the factory reported on the balance sheet.
D. What impact does capitalizing interest have on net income for 2016 ? Explain.

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Definitions:

Future Favors

Acts of kindness or assistance that are promised to be done in the future.

Mutual Obligation

A situational dynamic where two parties each have duties or services they are expected to perform for the benefit of the other.

Whistleblowing

The act of exposing any kind of information or activity within a private, public, or government organization that is deemed illegal, unethical, or not correct.

Stakeholder Social Responsibility

The duty and ethical obligation of an organization to consider and respond to the needs and interests of its stakeholders, including customers, employees, and the wider community.