8.3Northern Star Corporation incurred the following costs in constructing a new maintenance building during the fiscal period: Direct labour costs incurred up to the point when the building is in a condition necessary for use as management intended, but before Northern begins operating in the building, $73,000.Additional direct labour costs incurred before Northern begins operating in the building, $6,000Material purchased for the building, $82,500Interest on the loan to finance construction until completion, $2,300Allocation of variable plant overhead based on labour hours worked on the building, $29,000Architectural drawings for the building, $7,500Allocation of the president's salary, $54,000 RequiredWhat costs should be included in the cost of the new building if Northern Star prepares financial statements in accordance withIFRSASPEAssume that Northern Star’s Management would consider a building ready for productive use when Northern Star begins operating in the building and would prefer not to capitalize interest costs directly attributable to the acquisition, construction, or development of property, plant, and equipment.

1. IFRSUnder IFRS, the costs to be capitalized include all costs directly attributable to bringing…

Answered: 8.3 Northern Star Corporation incurred…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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8.3

Northern Star Corporation incurred the following costs in constructing a new maintenance building during the fiscal period:

Direct labour costs incurred up to the point when the building is in a condition necessary for use as management intended, but before Northern begins operating in the building, $73,000.
Additional direct labour costs incurred before Northern begins operating in the building, $6,000
Material purchased for the building, $82,500
Interest on the loan to finance construction until completion, $2,300
Allocation of variable plant overhead based on labour hours worked on the building, $29,000
Architectural drawings for the building, $7,500
Allocation of the president's salary, $54,000

Required

What costs should be included in the cost of the new building if Northern Star prepares financial statements in accordance with

IFRS
ASPE

Assume that Northern Star’s Management would consider a building ready for productive use when Northern Star begins operating in the building and would prefer not to capitalize interest costs directly attributable to the acquisition, construction, or development of property, plant, and equipment.

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