In early February 2023, Marigold Corp. began construction of an addition to its head office building that is expected to take 18 months to complete. The following 2023 expenditures relate to the addition: Feb. 1 Mar. 1 July 1 Dec. 1 Dec. 31 Payment #1 to contractor Payment to architect Payment #2 to contractor Payment #3 to contractor Asset carrying amount $138,000 21,000 55,600 177,000 $391,600 On February 1, Marigold issued a $102,000, three-year note payable at a rate of 10% to finance most of the initial payment to the contractor. No other asset-specific debt was entered into. Details of other interest-bearing debt during the period are provided in the table below: Other Debt Instruments Outstanding-2023 10%, 15-year bonds, issued May 1, 2008, matured May 1, 2023 8%, 10-year bonds, issued June 15, 2017 6%, 12-year bonds, issued May 1, 2023 Amount of interest $ Principal Amount $306,000 $500,000 $306,000 What amount of interest should be capitalized for the fiscal year ended December 31, 2023, according to IAS 23? (Do not round intermediate calculations. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answer to O decimal places, e.g. 5,275.)
In early February 2023, Marigold Corp. began construction of an addition to its head office building that is expected to take 18 months to complete. The following 2023 expenditures relate to the addition: Feb. 1 Mar. 1 July 1 Dec. 1 Dec. 31 Payment #1 to contractor Payment to architect Payment #2 to contractor Payment #3 to contractor Asset carrying amount $138,000 21,000 55,600 177,000 $391,600 On February 1, Marigold issued a $102,000, three-year note payable at a rate of 10% to finance most of the initial payment to the contractor. No other asset-specific debt was entered into. Details of other interest-bearing debt during the period are provided in the table below: Other Debt Instruments Outstanding-2023 10%, 15-year bonds, issued May 1, 2008, matured May 1, 2023 8%, 10-year bonds, issued June 15, 2017 6%, 12-year bonds, issued May 1, 2023 Amount of interest $ Principal Amount $306,000 $500,000 $306,000 What amount of interest should be capitalized for the fiscal year ended December 31, 2023, according to IAS 23? (Do not round intermediate calculations. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answer to O decimal places, e.g. 5,275.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:In early February 2023, Marigold Corp. began construction of an addition to its head office building that is expected to take 18 months
to complete. The following 2023 expenditures relate to the addition:
Feb. 1
Mar. 1
July 1
Dec. 1
Dec. 31
Payment #1 to contractor
Payment to architect
Payment # 2 to contractor
Payment #3 to contractor
Asset carrying amount
$138,000
21,000
55,600
Amount of interest $
177,000
$391,600
On February 1, Marigold issued a $102,000, three-year note payable at a rate of 10% to finance most of the initial payment to the
contractor. No other asset-specific debt was entered into. Details of other interest-bearing debt during the period are provided in the
table below:
Other Debt Instruments Outstanding-2023
10%, 15-year bonds, issued May 1, 2008, matured May 1, 2023
8%, 10-year bonds, issued June 15, 2017
6%, 12-year bonds, issued May 1, 2023
Principal Amount
$306,000
$500,000
$306,000
What amount of interest should be capitalized for the fiscal year ended December 31, 2023, according to IAS 23? (Do not round
intermediate calculations. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answer to O decimal places, e.g. 5,275.)
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