Acruni Co. had the following loans in place at the beginning of 2019.1 January2019GHC m10% Bank loan repayable 20209.5% Bank loan repayable 20218.9% debenture repayable 202412080100On 1 January 2019, Acruni Co began construction of a qualifying asset,a piece of machinery for a hydroelectric plant, using existing borrowings.Expenditure drawn down for the construction was GHC30 million on 1January 2019, and GHC20 million on 1 October 2019. Surplus funds wereinvested temporarily at a rate of 2%.Requireda) Calculate the borrowing costs that can be capitalized for the piece ofmachinery.b) Compute the cost of the machinery that will be reported in thestatement of financial position as at December, 2019ATES)

Step 1 As per the Provisions of US GAAP, Borrowing cost is the” interest and other cost “ which is…

Required a) Calculate the borrowing costs that can be capitalized for the piece of machinery. b) Compute the cost of the machinery that will be reported in the statement of financial position as at December, 2019

Required a) Calculate the borrowing costs that can be capitalized for the piece of machinery. b) Compute the cost of the machinery that will be reported in the statement of financial position as at December, 2019

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Required: Calculate the following: a. estimated total cost of completion, b. estimated profit on…

A: 1) estimated total cost of completion the cost actually spent till date = the plant used at site…

Q: Explain the key aspects of the ‘cost basis’ and ‘revaluation basis’ for non-current assets, and…

A: Revaluation model A company has the choice to carry a plant and equipment at its appraised value…

Q: Answer the below questions using the FASB Codification. Make sure that you properly cite the ASC…

A: According to ASC 410-20-25-1, an Asset Retirement Obligation (ARO) is a legal obligation associated…

Q: Sandhill Construction, which follows ASPE entered into a contract to construct a bridge for a…

A: The completed contract method is an accounting method used to recognize revenue and expenses for…

Q: 1. What amount of depreciation should be reported in the historical cost income statement for 2021?…

A: 1. Depreciation Expense based on Historical Cost = P5,000,000/5years = P1,000,000 2.…

Q: Which of the following is (are) acceptable valuation(s) for reporting of assets on the balance…

A: The objective of the question is to identify the correct methods of asset valuation for reporting on…

Q: GAAP provides guidelines for the inclusion of interest in the initial cost of a self-constructed…

A: 1.

Q: BUG Company constructed an asset for its own use. Construction started on January 1, 2019 and the…

A: As per IAS 23 in.case of specific borrowings The borrowings cost eligible for capitalisation would…

Q: 2019 2018 Assets Current assets Property, plant, and equipment, net Intangibles Total assets P…

A: Formula: Increase / decrease = Amount in 2019 - Amount in 2018

Q: Accounting Property and equipment, at cost, consisted of the following: December 31,…

A: Fixed assets means those assets which is used for the business purpose for many year to come and…

Q: Assume that Sunland Construction Company has a non-cancellable contract to construct a $4,520,000…

A: Journal entry is a primary entry that records the financial transactions initially. The transactions…

Q: general journal adjusting entry on December 31, 2021

A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…

Q: Waiting for Answer

A: 1. Explanation:The book value (also known as the carrying amount) of a fixed asset is determined by…

Q: Flint Company has a non-cancellable contract for $1,813,500 to construct a bridge. The contract is…

A: The completed contract method of revenue recognition refers to an accounting procedure in which all…

Q: In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa…

A: "Since you have posted a question with multiple sub-parts, we will solve the subparts asked by you.…

Q: Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the…

A: In construction costing, the percentage of completion method is used. This method reports the…

Q: Problem 28-3 (IAA) (AAT) 6-88 moldo1T On January 1, 2020 Universal Company paid P5,400,000 for…

A: Asset is defined as any resource that attracts income to its lawful owner. Each asset has varied…

Q: 6. Selected data for Katan, Inc. at 12/31/21 is as follows: Total assets Total liabilities Net sales…

A: Note: Question 4 mentions references to Questions 1 & 2, but the details of Question 1 &2…

Q: ! Required information [The following information applies to the questions displayed below.] Tater…

A: calculation of above requirement are as follows

Q: GUY Company constructed an asset for its own use. Construction started on January 1, 2019 and the…

A: The borrowing cost which is incurred for the constrr of a qualifying asset will be capitalized as…

Q: Determine the carrying amount of the investment in associate on December 31, 2020

A: Carrying value is an accounting store of worth that bases the worth of an asset or firm on the…

Q: The “carrying value” of a long term asset on the Balance Sheet represents: a. The net book value of…

A: Correct answer-option a:The net book value of the asset

Q: Prepare a Schedule of Depreciation on Property, Plans and Equipment

A: Below is the depreciation schedule:

Q: Which of the following is an essential step in the case of cost/income equivalents for comparing…

A: In financial analysis there is need of comparisons between machines to select most economically…

Q: (Multiple Choice Question) Amortizable Cost refers to 1. An asset's Net Book Value minus its…

A: Amortizable cost refers to that cost of a fixed asset which has to be charged as an expense either…

Q: Classified Balance Sheet: Identify each of the following elements as a Current Asset (CA),…

A: Classified balance sheet is a financial statements it is similar to standard balance sheet and…

Q: An entity starts the capitalization of borrowing costs to the cost of a qualifying asset when *…

A: Borrowing costs are costs that are incurred for borrowing money for the purpose of acquisition,…

Q: Description 2020 Assets Office furniture Machinery Used delivery truck 2021 Assets Computers and…

A: Section 179 expense refers to the deduction to the taxpayers on the cost of the ceratin properties…

Q: 1. What is the construction revenue for the year ended December 31, 2018?

A: As per our protocol we provide solution to one question only but you have asked multiple questions…

Q: nise; expires payment on leasehold (term of lease is 2 y 2019 including incorporation fee, P3,000 a…

A: The balance sheet is given as,

Q: Black Widow Corporation engaged you for the first time to audit their financial statements as of and…

A: Intangible assets - Intangible assets are assets that are not tangible or physical in nature and are…

Q: The Pharm Co. self-constructed an asset for its own use. Construction started on Dec. 31, 2019.…

A: If an entity borrows funds specifically to obtain or construct qualifying asset , the borrowing cost…

Q: ntity began the self-construct. 20 and the building was cor ollowing expenditures were ry 1 1 ber 1…

A: 1) Weighted Average Accumulated Expenses = 1,000,000*12/12 + 2,000,000*6/12 + 3000,000*2/12 =…

Q: Assuming cost model was used for the Real Property B, what is the carrying value of the property as…

A: Under cost model, an asset is valued and carried at cost less depreciation in the subsequent years.…

Q: The balance sheets of Tully Corp. showed the following at December 31, 2020, and 2019: December 31,…

A: The accumulated depreciation is the amount of depreciation charged on fixed assets till date. The…

Q: Compute for the TOTAL amount of Accumulated depreciation for the company's PPE

A: Depreciation Expenses It is important to provide depreciation cost to the assets which can reveal…

Q: The step in setting working capital balances, "set the permanent current asset balances" involves:

A: Working capital is a financial metric that represents the difference between a company's current…

Q: actor tables, (2) a financial calculator, or (3) Excel functions, calculate the amount Oriole Corp…

A: The practice of identifying and disclosing lease transactions in a company's financial statements is…

Q: The cost incurred to extend an asset's useful life is recorded as: O a. maintenance expenditures. O…

A: All expenses that are incurred to increase the future economic benefits are known as capital…

Q: What is the return on total assets given the figures attached?

A: Return on total assets is the comparison of operational income with that of the total assets. It…

Question

Acruni Co. had the following loans in place at the beginning of 2019.
1 January
2019
GHC m
10% Bank loan repayable 2020
9.5% Bank loan repayable 2021
8.9% debenture repayable 2024
120
80
100
On 1 January 2019, Acruni Co began construction of a qualifying asset,
a piece of machinery for a hydroelectric plant, using existing borrowings.
Expenditure drawn down for the construction was GHC30 million on 1
January 2019, and GHC20 million on 1 October 2019. Surplus funds were
invested temporarily at a rate of 2%.
Required
a) Calculate the borrowing costs that can be capitalized for the piece of
machinery.
b) Compute the cost of the machinery that will be reported in the
statement of financial position as at December, 2019
ATES)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

It is the initial cost of acquiring an asset, plus sales tax, transportation and normal costs of making asset serviceable. a. Adjusted standard cost O b. Cost basis O c. Standard cost O d. Adjusted cost basis
Under IFRS, when a company chooses the revaluation model as its accounting policy for measuring property, plant, and equipment, which of the following statements is correct? a. When an asset is revalued, the entire class of property, plant, and equipment to which the asset belongs must be revalued. b. When an asset is revalued, individual assets within a class of property, plant, and equipment to which that asset belongs can be revalued. c. Revaluations of property, plant, and equipment must be made every three years. d. An increase in an asset’s book value as a result of the first revaluation must be recognized as a component of profit and loss.
1) What is the "Net Investment in Fixed Assets" Ending Net Fixed Assets = Question 1 of 19 -Beginning Net Fixed Assets = Question 2 of 19 +Depreciation = Question 3 of 19 Net Investment in Fixed Assets = Question 4 of 19 2) Please Calculate the "Chante in Net Working Capital" 2019 2018 Ending NWC Question Blank 5 of 19 - Question 6 of 19 = Question 7 of 19 -Beg NWC Question Blank 8 of 19 - Question Blank 9 of 19 = Question Blank 10 of 19 Change in NWC = Question Blank 11 of 19 3) Please Calculate the "Operating Cash Flow" EBIT = Question Blank 12 of 19 +Depreciation =…
Assume on December 1, 2017, a company borrows funds to purchase equipment. The company will make the following principal payments: 2018, $5,200 2019, $3,400 2020, $2,207 2021, $1,434 On December 31, 2018, the total long term liabilities will be $______
Choose the appropriate definition for each term. Term Amortization Useful life Licensing right Least and latest rule Component allocation Fixed asset turnover ratio Depreciable cost Copyright Depreciation schedule Revenue expenditures 2 Definition
In the light of MFRS138 Intangible Asset, briefly explain how each of the above transaction should be accounted for in the financial statements of PJM Bhd for the year ended 31 December 2017. Discuss the recognition criteria for intangible assets contained in MFRS138. (a) (b)
PLEASE provide Solutions
A manufacturing company, incurred capital expenditure on a factory building and machinery as follows, for the year ended 30 November 2021: Required: Compute the capital allowance(s), balancing allowance(s) and or balancing charge(s) for the year of assessment 2021.
For questions related to the LESSEE (COMPLICATION, INC.), assume that they employ the STRAIGHT-LINE METHOD OF DEPRECIATION. Use the Present Value Factors as is (straight from the calculator, no rounding), round off final answers to the NEAREST WHOLE NUMBER.(1) LEASE LIABILITY ON JANUARY 1, 20X1 (2) RIGHT-OF-USE ASSET ON JANUARY 1, 20X1 (3) TOTAL Finance Income OVER THE LEASE TERM
End of year a. Determine the as Asset turnover
please need help with must must explanation , narrations , computation for each entry and for each calculation , parts answer in text form