Early in 2020, Nickel Corporation engaged Dime Ltd. to design and construct a complete modernization of...

 

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Early in 2020, Nickel Corporation engaged Dime Ltd. to design and construct a complete modernization of Nickel's manufacturing facility. Construction began on June 1, 2020, and was completed on Decembe 31, 2020. Nickel made the following payments to Dime Ltd. during 2020: Date June 1, 2020 August 31, 2020 December 31, 2020 Payment $ 3,300,000 4,800,000 4,000,000 In order to help finance the construction, Nickel issued the following during 2020: $ 2,000,000, ten-year, 9% bonds payable, issued at par on May 31, 2020, with interest payable annually on May 31, 1,000,000 common shares, issued at $ 10 per share on October 1, 2020. Required a) Calculate the capitalization of borrowing costs? b) What is the final cost of the asset to be capitalized? Early in 2020, Nickel Corporation engaged Dime Ltd. to design and construct a complete modernization of Nickel's manufacturing facility. Construction began on June 1, 2020, and was completed on Decembe 31, 2020. Nickel made the following payments to Dime Ltd. during 2020: Date June 1, 2020 August 31, 2020 December 31, 2020 Payment $ 3,300,000 4,800,000 4,000,000 In order to help finance the construction, Nickel issued the following during 2020: $ 2,000,000, ten-year, 9% bonds payable, issued at par on May 31, 2020, with interest payable annually on May 31, 1,000,000 common shares, issued at $ 10 per share on October 1, 2020. Required a) Calculate the capitalization of borrowing costs? b) What is the final cost of the asset to be capitalized?

Answer rating: 100% (QA)

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