Entity A is a local construction company which is listed in Hong Kong. It provides various construction
Question:
Entity A is a local construction company which is listed in Hong Kong. It provides various construction services to different types of customers. Entity A borrowed several long-term debts to maintain its company development and stability.
On 1 January 2020, Entity A contracted with Entity B to construct a residential building for $35,000,000 on a piece of land that Entity A had already purchased years earlier.
The construction was started on 1 January 2020. Entity A was to make five payments in 2020, with the last payment scheduled for the date of completion. The building was completed on 31 December 2020.
Entity A made the following payments during 2020:
- 1 January 2020 $5,500,000
- 1 April 2020 $1,600,000
- 31 July 2020 $11,890,000
- 1 October 2020 $9,500,000
- 30 November 2020 $6,510,000
Entity A had the following debt outstanding on 31 December 2020:
- 5.00%, 2-year long-term debt of $9,600,000 which was borrowed on 1 July 2019. It is specifically borrowed for the construction of the residential building project on 1 January 2020. The fund is re-invested and earns interest at a rate of 3.60% per annum. The interest earned is deposited to Entity A one month after the end of the reporting period, i.e. 31 January.
- 7.50%, 12-year long-term debt of $12,500,000 which was borrowed on 31 March 2016.
- 10.50%, 8-year long-term debt of $34,500,000 which was borrowed on 1 September 2018.
Except the funds specifically borrowed from the 2-year long-term debt, the other funds are all deposited in the company bank account. This company bank account is a simple saving account without any interest revenue.
The end of the reporting period is 31 December.
The annual interest payable to various lenders is always settled by direct bank transfer 2 weeks after the end of the reporting period, i.e. 15 January.
According to relevant accounting standards, measure the amount of the items below on 31 December 2020.
The interest payable to various Lenders is $.
The borrowing cost capitalized to Building is $.
The borrowing cost expensed to Profit and Loss is $.
The interest receivable from investments is $.
The carrying amount of the qualifying asset is $
Could you please show the steps?
