Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Question
Chapter 11, Problem 11.5BE
To determine
The amount of interest to be capitalized during the year.
Given information:
Amount of notes payable issued is $ 2,200,000.
Time period is 2 years.
Interest rate is 8%.
Interest income earned is $3,000.
Expenditures are given for the 1st year.
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Use the following information for the next two questions:
On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset:
Principal
12% bank loan (1.5 years) ₱ 1,000,000
10% bank loan (3-year) 8,000,000
Expenditures made on the qualifying asset were as follows:
Jan. 1 ₱ 5,000,000
March 1 4,000,000
August 31 3,000,000
December 1 2,000,000
Construction was completed on December 31, 20x1.
How much borrowing costs are capitalized to the cost of the constructed qualifying asset?
1,045,000 c. 1,026,667
971,111 d. 920,000
How much is the cost of the qualifying asset on initial recognition?
13,010,000 c. 14,920,000
15,045,000 d. 14,971,111
On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset:
Principal
12% bank loan (1.5 years) ₱ 1,000,000
10% bank loan (3-year) 8,000,000
Expenditures made on the qualifying asset were as follows:
Jan. 1
₱ 5,000,000
March 1
4,000,000
August 31
3,000,000
December 1
2,000,000
Construction was completed on December 31, 20x1.
How much borrowing costs are capitalized to the cost of the constructed qualifying asset?
1,045,000 1,026,667
971,111 920,000
How much is the cost of the qualifying asset on initial recognition?
13,010,000 14,920,000…
Subject : Accounting
Chapter 11 Solutions
Intermediate Accounting
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