This topic is about borrowing costs. Please choose the letter of the correct answer. Akira Company had the following loans outstanding for 2018.Specific construction loanGeneral loan1,000,00020,000,00010%12%The entity began the self-construction of a building on January1, 2020 and the building was completed on December 31,2020.The following expenditures were made during the year:JanuaryJulyNovember 11,000,00012,000,0003,000,0001. What is the capitalizable borrowing cost?a. 250,000b. 300,000c. 280,000d. 100,0002. What is the cost of the new building?a. 6,000,000b. 6,280,000c. 6,300,000d. 6,250,0003. What is the interest expense for 2020?a. 2,220,000b. 2,400,000c. 2,120,000d.

1) Weighted Average Accumulated Expenses = 1,000,000*12/12 + 2,000,000*6/12 + 3000,000*2/12 =…

Answered: ntity began the self-construct. 20 and…

ntity began the self-construct. 20 and the building was cor ollowing expenditures were ry 1 1 ber 1 hat is the capitalizable borre 250,000 300,000

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

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 18E

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Question

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This topic is about borrowing costs. Please choose the letter of the correct answer.

Akira Company had the following loans outstanding for 2018.
Specific construction loan
General loan
1,000,000
20,000,000
10%
12%
The entity began the self-construction of a building on January
1, 2020 and the building was completed on December 31,
2020.
The following expenditures were made during the year:
January
July
November 1
1,000,000
1
2,000,000
3,000,000
1. What is the capitalizable borrowing cost?
a. 250,000
b. 300,000
c. 280,000
d. 100,000
2. What is the cost of the new building?
a. 6,000,000
b. 6,280,000
c. 6,300,000
d. 6,250,000
3. What is the interest expense for 2020?
a. 2,220,000
b. 2,400,000
c. 2,120,000
d.

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