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PROBLEM 2 (17 MARKS) Anson Ltd. is constructing a Production Complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1,
PROBLEM 2 (17 MARKS) Anson Ltd. is constructing a Production Complex that qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2023 to June 30, 2024 (completion date is June 30, 2024). Expenditures on the project: At the beginning of construction work, Anson Lad. had the following debes cutstanding: (1) Loan A: $1.000,000 with 125 interest rate, due to mature on December 31. 2026 (2) Loan B: $3,000,000 with 14% interest rate, with a maturity date of December 31,2025 (3) Loan C: $6,000,000 with 8% interest rate, with a maturity date of December 31, 2023. Anson Ldd. uses the weighted average interest rate of its oatstanding debts to copitalize interest for the Production Complex, Requirement (a): First, determine the amount of interest to be capitalized by Anson Lid. for 2023 . Show the necessary calculations. Then, prepare the appropriate journal entries to recond the interest capitalization for the Production Complex during 2023. [9 marks] Requirement (b): First, determine the amount of interest to be capitalized by Anwon Lid. for 2024. Show the necessary calculation. Then. prepare the appropriate journal entries to recotd the interest capitalization for the Production Complex during 2024. [8 marks]
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