Question
At the start of 2020, Jim Co. obtained a $20m specific construction loan required to finance the construction of a qualifying asset. During 2020, the
At the start of 2020, Jim Co. obtained a $20m specific construction loan required to finance the construction of a qualifying asset. During 2020, the loan incurred $4m of interest costs, and $400,000 of interest income was earned on the unused principal. Under IAS 23, the amount of borrowing costs capitalized during 2020 should equal:
A)$4,000,000
B)$3,600,000
C)$24,400,000
D)$4,400,000
During 2020, Clearer Skin Inc received 100 lawsuits from customers claiming that the company's products caused skin allergies. At 12/31/2020, the company's attorney thought it 85% likely that his client would be found guilty in all cases. The estimated settlement amount per case is predicated as either $2,000 or $6,000, with each outcome being 50% likely (i.e. equally likely). As at 12/31/2020, how would this situation be accounted for under IFRS and U.S GAAP?
A) A provision of $600,000 would be recognized/accrued under IFRS, and a contingent liability of $200,000 would be recognized/accrued under US GAAP.
B) A provision of $400,000 would be recognized/accrued under both IFRS and US GAAP.
C) A provision of $800,000 would be recognized/accrued under IFRS, and a contingent liability of $200,000 would be recognized/accrued for under US GAAP.
D)A provision of $400,000 would be recognized/accrued under IFRS, and a contingent liability of $200,000 would be recognized/accrued under US GAAP.
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