(Capitalization of Borrowing Costs) In early February 2023, Huey Corp. began construction ofan addition to its head office building that is expected to take 18 months to complete. Thefollowing 2023 expenditures relate to the addition: Feb. 1120,000 Mar. 1Payment to architect24,000 July 1Payment #1 to contractor $Payment #2 to contractor60,000 Dec. 1Payment #3 to contractor180, 000 Dec. 31 Asset carrying amount$384,000 On February 1, Huey issued a $100,000, three-year note payable at a rate of 12%to finance most of the initial payment to the contractor. No other asset-specific debt wasentered into. Details of other interest-bearing debt during the period are provided in thetable below: Other Debt Instruments Outstanding-2023bonds, issued May 1, 2008, matured May 1, 2023Principal Amount 9%, 15-year$300,000 7%, 10-year bonds, issuedJune 15, 2017 $500,000 6%, 12-year bonds, issued May 1, 2023$300,000 InstructionsWhat amount of interest should be capitalized for the fiscal year ended December 31, 2023,according to IAS 23?

1) Determine Capitalized RateOther Debt Instruments…

(Capitalization of Borrowing Costs) In early February 2023, Huey Corp an addition to its head office building that is expected to take 18 mont following 2023 expenditures relate to the addition: Feb. 1 Payment 120,000 Mar. 1 Payment to architect 24,000 July 1 Payment # Payment #3 to contractor 180,000 Dec. 31 A- 60,000 Dec. 1 $384,000 On February 1, Huey issued a $100,000, three-year note p to finance most of the initial payment to the contractor. No other asset entered into. Details of other interest-bearing debt during the period table below: Other Debt Instruments Outstanding-2023 Principal

(Capitalization of Borrowing Costs) In early February 2023, Huey Corp an addition to its head office building that is expected to take 18 mont following 2023 expenditures relate to the addition: Feb. 1 Payment 120,000 Mar. 1 Payment to architect 24,000 July 1 Payment # Payment #3 to contractor 180,000 Dec. 31 A- 60,000 Dec. 1 $384,000 On February 1, Huey issued a $100,000, three-year note p to finance most of the initial payment to the contractor. No other asset entered into. Details of other interest-bearing debt during the period table below: Other Debt Instruments Outstanding-2023 Principal

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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