Interest Capitalization Explained
ฝัง
- เผยแพร่เมื่อ 2 ต.ค. 2024
- In this session, I will discuss interest capitalization
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Great video Prof. A question. When u calculate the simple average do we divide the amount by 2 or 12? In the example that you gave at 7:42 u mentioned 150000/2. Can u clarify?😁
Thanks.. My lecturer through Online.. studying online your courses from Somalia.. I appreciate you a lot Dr. Farhat..
Most welcome. Please take a look at my website: farhatlectures.com/ then choose your course.
watching this video grant me confidence, I honestly feel some of the farhat video is so much better than beckers , and it is freeeeeee
For the Expenditures table, underneath the December 31st, you put 100,000. Where did the 100,000 come from? Why the total 589,000 for the total expenditures?
80,000 / 600,000
The 80,000 comes from December 31. The 600,000 is calculated as 150 + 250 + 100 + 100. Right?
1.) the ACTUAl expenditure is 589k. You really rid spend this much, but the weighted amount is 333,332 because the 100k at the end of the year was outstanding for zero months
2.) the calculation of 80k/600k relates to the calculation of the weighted average interest rate for the portion of debt beyond the ordinary borrowings
OK, when u go into the interest part thats when I am confused.
What if the project starts, say March 1 and ends the same year on October 1st. Is the cap period for the first expenditure on March 1, 10/12 or 7/12 because the project ended before the year end? This part of the capitalization interest calculation is unclear to me. Thank you.
you would use 10/12 because interest works on a monthly basis til year end. at the end of the calcuation of the total WAAE then you can multiply by 7/12
Gratitude 😇
another great video! such a clear explanation.
Thank you. Please connect with me: linktr.ee/farhatlectures
@@AccountingLectures I need to activate the translation of this video into Arabic
Becker never even attempted to explain this. They just throw the problems at you. Thanks Professor Farhat!
Most welcome. Please check my website for more. Start your free trial : farhatlectures.com/
15:03 Another method
During the current year, Bay Co. constructed machinery for its own use and for sale to customers. Bank loans financed these assets both during construction and after construction was complete. How much of the interest incurred should be reported as interest expense in the year-end income statement?
Interest incurred
for machinery
for own use
Interest incurred
for machinery
held for sale
A.
All interest
incurred
Interest incurred
after completion
B.
All interest
incurred
All interest
incurred
C.
Interest incurred
after completion
Interest incurred
after completion
D.
Interest incurred
after completion
All interest
incurred
If an expenditure is made March 31, and the project is complete September 30 of the same year, is it 6/9 or 6/12? I need a credible answer.
I have a question, do you capitalize int on asset hold for sale and for own use?
I didn't we divide by 12 instead of 2 at 5:53? If we divided equally should we divide by the number of months.
Actual expenditures should be $ 580,000 right?
How to adjust actual interest and avoidable interest if the borrowing interest is payable semiannually or monthly?
Problem is.... projects newer start on 1st or 30s, they start when they start... how to calculate interest if project was started on 16th of the month? Thank you
It is not a problem. You can prorate
I am so sorry, my on-line classes ACCT 201-202 in college were just waist of time, I have no idea how to use some of my knowledge on practice, so... how many times I can capitalize an interest which is increase price of asset??? just ones at the beginning of usage my asset or every year? Thank you again
I need to activate the translation of this video into Arabic
I need to activate the translation of this video into Arabic
I need to activate the translation of this video into Arabic
What CPA discipline has this question for the exam?
FAR
I am watching this lecture using a headphone. The sound comes out only on the left side. While it doesn't prevent me from listening to you, it would be a better experience if the audio is working on both sides. Please look into this issue.
Please enable mono audio.
@@AccountingLectures This issue does not occur when playing other videos on TH-cam. I assume that you can change the audio setting on your side when making these videos.
bro capitalizing interest cost means? the internet is giving very weird and complicated answers :/
You're including interest in the asset's cost as opposed to treating it as an expense
great video thanks
Glad you enjoyed it. Thank you and please visit the website for more farhatlectures.com/
I need to activate the translation of this video into Arabic
I cannot continue watching as voice comes to left side ear only.