. IFRS requires capitalizing actual interest (with modification). What items are to be considered for capitalization? Explain.

b. On November 1, 2010, Saif Company contracted Ahmed Construction Co. to construct a building for $1,600,000 on land costing $400,000 (purchased from the contractor and included in the first payment). Saif made the following payments to the construction company during 2011.

Date	Amount $
1st Jan	500,000
1st Mar	400,000
1st Jun	350,000
1st Sep	500,000
1st Dec	250,000

Required: Compute weighted-average accumulated expenditures for 2011

Q2. (1.5 marks)

Presented below are the components related to an office building that ABC Company is considering purchasing for SAR10,000,000.

Component Useful Life Value

Building structure 60-year life 5,400,000

Building engineering 30-year life 2,400,000

Building external works 30-year life 900,000

Instructions

1. Compute depreciation expense for 2010, assuming that ABC uses component depreciation.
2. Assume that the building engineering was replaced in 20 years at a cost of SAR 2,600,000 cash. Prepare the entry to record the replacement of the old component with the new component.

   . IFRS requires capitalizing actual interest (with modification). What items are to be considered for capitalization? Explain.

   b. On November 1, 2010, Saif Company contracted Ahmed Construction Co. to construct a building for $1,600,000 on land costing $400,000 (purchased from the contractor and included in the first payment). Saif made the following payments to the construction company during 2011.

   Date	Amount $
   1st Jan	500,000
   1st Mar	400,000
   1st Jun	350,000
   1st Sep	500,000
   1st Dec	250,000

   Required: Compute weighted-average accumulated expenditures for 2011

   Q2. (1.5 marks)

   Presented below are the components related to an office building that ABC Company is considering purchasing for SAR10,000,000.

   Component Useful Life Value

   Building structure 60-year life 5,400,000

   Building engineering 30-year life 2,400,000

   Building external works 30-year life 900,000

   Instructions

3. Compute depreciation expense for 2010, assuming that ABC uses component depreciation.
4. Assume that the building engineering was replaced in 20 years at a cost of SAR 2,600,000 cash. Prepare the entry to record the replacement of the old component with the new component.

   . IFRS requires capitalizing actual interest (with modification). What items are to be considered for capitalization? Explain.

   b. On November 1, 2010, Saif Company contracted Ahmed Construction Co. to construct a building for $1,600,000 on land costing $400,000 (purchased from the contractor and included in the first payment). Saif made the following payments to the construction company during 2011.

   Date	Amount $
   1st Jan	500,000
   1st Mar	400,000
   1st Jun	350,000
   1st Sep	500,000
   1st Dec	250,000

   Required: Compute weighted-average accumulated expenditures for 2011

   Q2. (1.5 marks)

   Presented below are the components related to an office building that ABC Company is considering purchasing for SAR10,000,000.

   Component Useful Life Value

   Building structure 60-year life 5,400,000

   Building engineering 30-year life 2,400,000

   Building external works 30-year life 900,000

   Instructions

5. Compute depreciation expense for 2010, assuming that ABC uses component depreciation.
6. Assume that the building engineering was replaced in 20 years at a cost of SAR 2,600,000 cash. Prepare the entry to record the replacement of the old component with the new component.