Answer: $20,000
Explanation:
From the question, we are told that Liddy Corp. began constructing a new warehouse for its operations in the current year and that Liddy incurred interest of $10,000 on a working capital loan, and an interest on a construction loan for a warehouse of $70,000. The interest that was computed on the average accumulated expenditures for the warehouse construction was $60,000.
To calculate the amount of interest that Liddy should expense for the year, we add the $10,000 Liddy interest that Liddy incurred on a working capital loan plus the interest on the construction loan for the warehouse of $70,000. We then subtract the expenditure of $60,000 from the value gotten. This will be:
= $10,000 + $70,000 - $60,000
= $20,000
The amount of interest should Liddy expense for the year is $20,000.
Answer:
$20,000
Explanation:
From the question above Liddy incurred an interest of $10,000 on a working capital loan
Liddy also incurred an interest of $70,000 on a construction loan
Therefore, the total amount of interest is calculated as the sum of both interest incurred.
Total amount of interest incurred= $10,000+ $70,000
= $80,000
Liddy accumulated an expenditure for the construction of the warehouse in the amount of $60,000
The amount of interest that should be expensed by Liddy for the year is calculated as follows
Total interest incurred-Expenditure
= $80,000-$60,000
= $20,000
