Company A signed an agreement with a contractor to have a production facility built. The construction started on 01/01/2025 and continued until 08/31/2026. Company A borrowed a bank loan to be used in financing of the construction. The following information on Company A's bank loans is available: Annual Interest Date Borrowed Amount ($) Term Rate Specific Construction 01/01/2025 850,000 10 percent 2 years Loan Other Loan Other Loan 08/10/2024 450,000 12 percent 3 years 11/05/2023 750,000 13 percent 5 years Company A incurred the following costs during 2025: Expenditure Date Expenditure Amount ($) 01/01/2025 03/01/2025 07/01/2025 12/31/2025 600,000 720,000 540,000 330,000 The amount of interest cost to be capitalized in 2025 is approximately: $160,027 O $155,626 O $163,275 $152,215
Company A signed an agreement with a contractor to have a production facility built. The construction started on 01/01/2025 and continued until 08/31/2026. Company A borrowed a bank loan to be used in financing of the construction. The following information on Company A's bank loans is available: Annual Interest Date Borrowed Amount ($) Term Rate Specific Construction 01/01/2025 850,000 10 percent 2 years Loan Other Loan Other Loan 08/10/2024 450,000 12 percent 3 years 11/05/2023 750,000 13 percent 5 years Company A incurred the following costs during 2025: Expenditure Date Expenditure Amount ($) 01/01/2025 03/01/2025 07/01/2025 12/31/2025 600,000 720,000 540,000 330,000 The amount of interest cost to be capitalized in 2025 is approximately: $160,027 O $155,626 O $163,275 $152,215
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 10RE
Related questions
Question
![Company A signed an agreement with a contractor to have a production facility built. The construction
started on 01/01/2025 and continued until 08/31/2026. Company A borrowed a bank loan to be used in
financing of the construction. The following information on Company A's bank loans is available:
Annual Interest
Date Borrowed Amount ($)
Term
Rate
Specific Construction
01/01/2025
850,000
10 percent
2 years
Loan
Other Loan
Other Loan
08/10/2024
450,000
12 percent
3 years
11/05/2023
750,000
13 percent
5 years
Company A incurred the following costs during 2025:
Expenditure Date Expenditure Amount ($)
01/01/2025
03/01/2025
07/01/2025
12/31/2025
600,000
720,000
540,000
330,000
The amount of interest cost to be capitalized in 2025 is approximately:
$160,027
O $155,626
O $163,275
$152,215](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4cc39715-131d-4e5b-b34b-c4e7c72a2ff2%2Fc3e467e3-5686-4b43-92bc-cb7554fc9d62%2Fz7h07l5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Company A signed an agreement with a contractor to have a production facility built. The construction
started on 01/01/2025 and continued until 08/31/2026. Company A borrowed a bank loan to be used in
financing of the construction. The following information on Company A's bank loans is available:
Annual Interest
Date Borrowed Amount ($)
Term
Rate
Specific Construction
01/01/2025
850,000
10 percent
2 years
Loan
Other Loan
Other Loan
08/10/2024
450,000
12 percent
3 years
11/05/2023
750,000
13 percent
5 years
Company A incurred the following costs during 2025:
Expenditure Date Expenditure Amount ($)
01/01/2025
03/01/2025
07/01/2025
12/31/2025
600,000
720,000
540,000
330,000
The amount of interest cost to be capitalized in 2025 is approximately:
$160,027
O $155,626
O $163,275
$152,215
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