On 1 January 20X1, RM500 000 was borrowed by Tera Bhd at 15% p.a. to finance the construction of a qualifying asset. Construction commenced on 1 March 20X1 and expenditure was incurred at RM40 000 per month from March to December inclusive. Interest on investments at short call were as follows: January to February 20X1 (RM) March to December 20X1 (RM) 24,000 Surplus funds relating to RM500,000 borrowed Other surplus funds 8,000 3,000 11,000 20,000 44,000 Required: (i) State the requirement for interest on loan to be capitalised (ii) Calculate the amount of borrowing costs that may be capitalised the specific loan for the year ended 31 December 20X1. (iii) Calculate the other income and borrowing cost expensed from specific loan and other funds for the year ended 31 December 20X1.

On 1 January 20X1, RM500 000 was borrowed by Tera Bhd at 15% p.a. to finance the construction of a qualifying asset. Construction commenced on 1 March 20X1 and expenditure was incurred at RM40 000 per month from March to December inclusive. Interest on investments at short call were as follows: January to February 20X1 (RM) March to December 20X1 (RM) 24,000 Surplus funds relating to RM500,000 borrowed Other surplus funds 8,000 3,000 11,000 20,000 44,000 Required: (i) State the requirement for interest on loan to be capitalised (ii) Calculate the amount of borrowing costs that may be capitalised the specific loan for the year ended 31 December 20X1. (iii) Calculate the other income and borrowing cost expensed from specific loan and other funds for the year ended 31 December 20X1.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter1: Accounting And The Financial Statements

Section: Chapter Questions

Problem 39E: Exercise 1-39 Current Assets and Current Liabilities Hanson Construction has an operating cycle of...

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Exercise 1-39 Current Assets and Current Liabilities Hanson Construction has an operating cycle of '5' months. On December 31. 2019, Hanson has the following assets and liabilities: A note receivable in the amount of $1500 10 be collected in 6 months Cash totaling $1,380 Accounts payable totaling $2,100, all of which will be paid within 2 months Accounts receivable totaling $12,000, including an account for $7,000 that will be paid in 2 months and an account for $5,000 that will be paid in 18 months Construction supplies coming $6,200, all of which will be used in construction within the next 12 months Construction equipment costing $60,000 on which depreciation of $22,400 has accumulated A note payable to the bank in the amount of $6,800 is to be paid within the next year Required: Calculate the amounts of current assets and current liabilities reported on Hansons balance sheet at December 31, 2019. CONCEPTUAL CONNECTION Comment on Hansons liquidity.
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