Pathao is constructing a new building and in order to finance that construction,

Pathao borrows $2,000,000 at an interest rate of 10 percent per year on 1 January 2018. The

building will have a useful life of 30 years and salvage value of $20,000. Construction is completed

after two years, during which time the company earns $50,000 by temporarily investing the loan

proceeds.

a. What is the total amount of interest that will be capitalized under IFRS during the construction

period?

b. What is the total amount of interest that will be capitalized under US GAAP during the

construction period?

c. What will the yearly depreciation expense of this building when the building is complete, under

straight-line method

d. What will the depreciation rate be after construction is completed using the accelerated

method?