Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Question
Chapter 11, Problem 11.6BE
To determine
The amount of interest to be capitalized during the year if the firm is reporting under IFRS.
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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Students have asked these similar questions
Larkspur Inc. is constructing a building. Construction began on March 1 and was completed on December 31. Expenditures were
$732,000 on March 1, $976,000 on July 1, and $878,400 on December 1.
Compute Larkspur's weighted-average accumulated expenditures for interest capitalization purposes.
Weighted-Average Accumulated Expenditures
%24
This topic is about borrowing costs. Please choose the letter of the correct answer.
Example
ABC begins construction on a warehouse on 1/1/19 and completes on 12/31/19
Expenditures on DM, DL & MOH are as follows:
1/1/19
6/30/19
9/30/19
600,000
300,000
100,000
Debt outstanding during the construction period:
1/1/19
1/1/17
1/1/15
2 year note for Construction $500,000, 4%
issued a 5 year note $200,000, 3%
issued a 20 year bond payable $800,000, 6%
1. Calculation of WAAE (Weighted Average Accumulated Expenditures)
2. Calculation of Avoidable Interest
WAAE
interest
Avoidable interest
rate
Chapter 11 Solutions
Intermediate Accounting
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