Question
. The company completed construction of a new plant in Saskatchewan on December 15, 2020, to help it better meet the needs of its customers
. The company completed construction of a new plant in Saskatchewan on December 15, 2020, to help it better meet the needs of its customers west of Ontario. they use ASPE The costs associated with this construction project were as follows:
Land | $500,000 | |
Construction contract: building, 20 years of useful life, residual value of $50,000 | 1,500,000 | |
Equipment(See below) | ||
Furniture | 250,000 | |
Training costs (employees learning to use equipment) | 45,000 | |
Avoidable interest calculated at 8% on financing of construction project from inception until put in use | 75,000 |
The equipment purchased for the new plant was bought on a deferred payment contract signed on December 1. FFI issued a $5-million, five-year, noninterest-bearing note payable to the equipment supplier at a time when the annual market rate of interest was 6%. The note will be repaid with five equal payments made on December 1 of each year, beginning in 2021. Show calculations using factor Table A.4, a financial calculator, or Excel function PV. Round final amounts to the nearest dollar.
- Determine whether each expenditure related to the new Saskatchewan plant must be capitalized, expensed, policy choice. Enter dollar amount.
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