BUG Company constructed an asset for its own use. Construction started on January 1, 2019 and the asset was completed on December 31,2019. Expenditures incurred during the year were as follows: January 1- $400,000 April 7 - $500,000 August 14- $480,000 December 15 $150,000 If the company had a 6 months, 18% loan of $500,000, specifically obtained to financed the asset construction and prior to construction it earned an interest income of $5,000 from temporary investment, what is the amount of interest to be capitalised in the total cost of the self constructed asset?
BUG Company constructed an asset for its own use. Construction started on January 1, 2019 and the asset was completed on December 31,2019. Expenditures incurred during the year were as follows: January 1- $400,000 April 7 - $500,000 August 14- $480,000 December 15 $150,000 If the company had a 6 months, 18% loan of $500,000, specifically obtained to financed the asset construction and prior to construction it earned an interest income of $5,000 from temporary investment, what is the amount of interest to be capitalised in the total cost of the self constructed asset?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 7P: Dinnell Company owns the following assets: In the year of acquisition and retirement of an asset,...
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BUG Company constructed an asset for its own use. Construction started on January 1, 2019 and the asset was completed on December 31,2019. Expenditures incurred during the year were as follows:
January 1- $400,000
April 7 - $500,000
August 14- $480,000
December 15 $150,000
If the company had a 6 months, 18% loan of $500,000, specifically obtained to financed the asset construction and prior to construction it earned an interest income of $5,000 from temporary investment, what is the amount of interest to be capitalised in the total cost of the self constructed asset?
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