Entity A has the following loan finance in place during the year: $2,560,000 of 7.50% loan finance $3,550,000 of 9.50% loan finance Entity A constructed a new factory which cost $5,655,000 and this was funded out of the existing loan finance. The factory took 9 months to complete within the same reporting year. REQUIRED: Measure the borrowing costs should be capitalised. The borrowing costs should be capitalised is _________?

Entity A has the following loan finance in place during the year: $2,560,000 of 7.50% loan finance $3,550,000 of 9.50% loan finance Entity A constructed a new factory which cost $5,655,000 and this was funded out of the existing loan finance. The factory took 9 months to complete within the same reporting year. REQUIRED: Measure the borrowing costs should be capitalised. The borrowing costs should be capitalised is _________?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 28P

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Question

Entity A has the following loan finance in place during the year:

$2,560,000 of 7.50% loan finance
$3,550,000 of 9.50% loan finance

Entity A constructed a new factory which cost $5,655,000 and this was funded out of the existing loan finance.

The factory took 9 months to complete within the same reporting year.

REQUIRED:

Measure the borrowing costs should be capitalised.

The borrowing costs should be capitalised is _________?

Definition Definition Total cost of procuring or producing a product or the cost that an individual or business owner undertakes for the manufacturing of goods.

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