Question
Entity A had the following general borrowings during 20x1 that were used to finance the construction of its new building: Date Term Interest Rate Amount
| Entity A had the following general borrowings during 20x1 that were used to finance the construction of its new building: |
| Date | Term | Interest Rate | Amount |
| January 2, 20x1 | 5 | 8.00% | 15,000,000 |
| January 2, 20x1 | 2 | 10.00% | 25,000,000 |
| Entity A made the following disbursements in relation to the construction of its building which started on January 2 and was completed on December 31, 2014: |
| January 2 | 9,000,000 |
| March 31 | 6,500,000 |
| June 2 | 7,500,000 |
| August 1 | 4,500,000 |
| December 31 | 2,500,000 |
| Total Disbursements | 30,000,000 |
| Interest was paid on December 31, 20x1. |
a. How much is the capitalizable interest?
b. How much interest should be recognized as expense?
c. How much is accounted for as part of PPE
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
