On March 1, 2019, Asbah contracted Nabali & Fares Construction Co. to construct a building on land
Question:
On March 1, 2019, Asbah contracted Nabali & Fares Construction Co. to construct a building on land costing $800,000 (purchased from the contractor and included in the first payment). The construction began on the office building on March 1. The following expenditures were incurred for construction:
Date Expenditures
March 1, 2019 $ 1,200,000
May 1, 2019 1,680,000
August 1, 2019 3,000,000
September 30, 2019 4,800,000
The building was completed and ready for occupancy on September 30, 2019. To finance purchase of the land and construction of the building, $1,500,000 was borrowed on March 1, 2019 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2019 was a $1,000,000, 12%, 6-year note payable dated January 1, 2019.
The interest cost to be capitalized during 2019 is Select one:
a. $ 135,000
b. $ 195,000
c. $ 159,000
d. $ 183,000
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield