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An entity capitalizes borrowing costs on the construction of property, plant, and equipment (PPE). On 1 July 2015, the entity purchased land for the construction
- An entity capitalizes borrowing costs on the construction of property, plant, and equipment (PPE). On 1 July 2015, the entity purchased land for the construction of a new factory and borrowed £10 million at 9% annual interest on that date to finance the construction. Construction commenced on 1 August 2015, and the factory was complete and ready for use on 1 March 2016. Production started in the factory on 1 May 2016.
- How much interest can be capitalised in PPE as a result of this construction in the year ended 30 June 2016?
- Group of answer choices
- £75,000
- £525,000
- £900,000
- £750,000
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International Accounting
Authors: Timothy Doupnik, Hector Perera
3rd Edition
978-0078110955, 0078110955
