Entity A had the following general borrowings during 20x1 that were used to finance the construction of
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Question:
Entity A had the following general borrowings during 20x1 that were used to finance the construction of its new building: |
Date | Term | Interest Rate | Amount |
January 2, 20x1 | 5 | 8.00% | 15,000,000 |
January 2, 20x1 | 2 | 10.00% | 25,000,000 |
Entity A made the following disbursements in relation to the construction of its building which started on January 2 and was completed on December 31, 2014: |
January 2 | 9,000,000 |
March 31 | 6,500,000 |
June 2 | 7,500,000 |
August 1 | 4,500,000 |
December 31 | 2,500,000 |
Total Disbursements | 30,000,000 |
Interest was paid on December 31, 20x1. |
a. How much is the capitalizable interest?
b. How much interest should be recognized as expense?
c. How much is accounted for as part of PPE
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: