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ntity began the self-construct. 20 and the building was cor ollowing expenditures were ry 1 1 ber 1 hat is the capitalizable borre 250,000 300,000

ntity began the self-construct. 20 and the building was cor ollowing expenditures were ry 1 1 ber 1 hat is the capitalizable borre 250,000 300,000

FINANCIAL ACCOUNTING
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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This topic is about borrowing costs. Please choose the letter of the correct answer.

Akira Company had the following loans outstanding for 2018. Specific construction loan General loan 1,000,000 20,000,000 10% 12% The entity began the self-construction of a building on January 1, 2020 and the building was completed on December 31, 2020. The following expenditures were made during the year: January July November 1 1,000,000 1 2,000,000 3,000,000 1. What is the capitalizable borrowing cost? a. 250,000 b. 300,000 c. 280,000 d. 100,000 2. What is the cost of the new building? a. 6,000,000 b. 6,280,000 c. 6,300,000 d. 6,250,000 3. What is the interest expense for 2020? a. 2,220,000 b. 2,400,000 c. 2,120,000 d.
Transcribed Image Text:Akira Company had the following loans outstanding for 2018. Specific construction loan General loan 1,000,000 20,000,000 10% 12% The entity began the self-construction of a building on January 1, 2020 and the building was completed on December 31, 2020. The following expenditures were made during the year: January July November 1 1,000,000 1 2,000,000 3,000,000 1. What is the capitalizable borrowing cost? a. 250,000 b. 300,000 c. 280,000 d. 100,000 2. What is the cost of the new building? a. 6,000,000 b. 6,280,000 c. 6,300,000 d. 6,250,000 3. What is the interest expense for 2020? a. 2,220,000 b. 2,400,000 c. 2,120,000 d.
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