Riviera Resorts began construction of a new hotel on December 1, 2020. On this date, the...

 

Transcribed Image Text:

Riviera Resorts began construction of a new hotel on December 1, 2020. On this date, the company purchased a parcel of land for $260,000 in cash. In addition, it paid $3,000 in surveying costs and $7,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $9,000, with $2,000 being received from the sale of materials. Architectural plans were also formalized on December 1, 2020, when the architect was paid $62,000. The necessary building permits costing $16,000 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor as follows: Date of Payment January 1 April 1 July 1 Amount of Payment $800,000 (a) Land. (b) Buildings. (c) Interest Expense. 900,000 500,000 The building was completed on July 1, 2021. To finance construction of this hotel, Riviera borrowed $2,500,000 from the bank on December 1, 2020. Riviera had no other borrowings. The $2,500,000 was a 10-year loan bearing interest at 6%. Instructions Compute the balance in each of the following accounts at December 31, 2020, and December 31, 2021. (Round amounts to the nearest dollar.) Riviera Resorts began construction of a new hotel on December 1, 2020. On this date, the company purchased a parcel of land for $260,000 in cash. In addition, it paid $3,000 in surveying costs and $7,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $9,000, with $2,000 being received from the sale of materials. Architectural plans were also formalized on December 1, 2020, when the architect was paid $62,000. The necessary building permits costing $16,000 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor as follows: Date of Payment January 1 April 1 July 1 Amount of Payment $800,000 (a) Land. (b) Buildings. (c) Interest Expense. 900,000 500,000 The building was completed on July 1, 2021. To finance construction of this hotel, Riviera borrowed $2,500,000 from the bank on December 1, 2020. Riviera had no other borrowings. The $2,500,000 was a 10-year loan bearing interest at 6%. Instructions Compute the balance in each of the following accounts at December 31, 2020, and December 31, 2021. (Round amounts to the nearest dollar.)

Answer rating: 100% (QA)

IFRS provides that interest can be capitalized on land and building for bringing the assets to prese... View the full answer