Acruni Co. had the following loans in place at the beginning of 2019.1 January2019GHC m10% Bank loan repayable 20209.5% Bank loan repayable 20218.9% debenture repayable 202412080100On 1 January 2019, Acruni Co began construction of a qualifying asset,a piece of machinery for a hydroelectric plant, using existing borrowings.Expenditure drawn down for the construction was GHC30 million on 1January 2019, and GHC20 million on 1 October 2019. Surplus funds wereinvested temporarily at a rate of 2%.Requireda) Calculate the borrowing costs that can be capitalized for the piece ofmachinery.b) Compute the cost of the machinery that will be reported in thestatement of financial position as at December, 2019ATES)

Step 1 As per the Provisions of US GAAP, Borrowing cost is the” interest and other cost “ which is…

Required a) Calculate the borrowing costs that can be capitalized for the piece of machinery. b) Compute the cost of the machinery that will be reported in the statement of financial position as at December, 2019

Required a) Calculate the borrowing costs that can be capitalized for the piece of machinery. b) Compute the cost of the machinery that will be reported in the statement of financial position as at December, 2019

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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solve both a and b Acruni Co. had the following loans in place at the beginning of 2019. 1 January 2019 GHC m10% Bank loan repayable 2020 1209.5% Bank loan repayable 2021 808.9% debenture repayable 2024 100On 1 January 2019, Acruni Co began construction of a qualifying asset, a piece of machinery for a hydroelectric plant, using existing borrowings. Expenditure drawndown for the construction was GHc30 million on 1 January 2019, and GHc20million on 1 October 2019. Surplus funds were invested temporarily at a rate of 2%. Requireda) Calculate the borrowing costs that can be capitalized for the piece ofmachinery. b) Compute the cost of the machinery that will be reported in the statementof financial position as at December ,2019
asap Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.
Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: 18% 5-year loan Note of R1,500,000 14% Debentures of R1,000,000 Expenditures on the project were made as follows: On the 31st March 2019, R600,000 was incurred; R800,000 was incurred on 30th June 2019; The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed. I. II. I. II. III.
Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding:I. 18% 5-year loan Note of R1,500,000II. 14% Debentures of R1,000,000Expenditures on the project were made as follows:I. On the 31st March 2019, R600,000 was incurred;II. R800,000 was incurred on 30th June 2019;III. The final expenditure incurred was R300,000 on 31st December 2019.During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum.Required: Determine the amount of borrowing costs to be capitalized and expensed.
No. One Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.
On 1January 2018, Global Drilling Ltd entered into a GHS22million contract for the construction of an office complex at Tema. The building was completed at the end of December 2018. During the period, thefollowing payments were made to the contractor:Payment date Amount GHS’m 1 January 2018 2.00 31 March 2018 6.00 30 September 2018 12.00 31 December 2018 2.00 22.00 Global Drilling’s borrowings as at its year end of 31stDecember 2018 were as follows:  10% 4-year Loan Note with simple interest payable annually, which relates specifically to the buildingproject, loans outstanding at 31stDecember 2018 amounted to GHS7,000,000. Interest of GHS700,000 was incurred on these borrowings during the year, and interest income of GHS200,000was earned on these funds while they were held in anticipation of payments.  12.5% Five-year Loan Note with simple interest payable annually; debt outstanding at 1stJanuary 2018 amounted to GHS10,000,000 and remained unchanged during the year. 10% Five-year…
Carriageways Co had the following bank loans outstanding during the whole of 2023 which form the company’s general borrowings for the year: £m 9% loan repayable 20X9 15 11% loan repayable 20Y2 24 Carriageways Ltd began construction of a qualifying asset on 1 April 2023 and withdrew funds of £6 million on that date to fund the construction. On 1 August 2023 an additional £2 million was withdrawn for the same purpose. Calculate the borrowing costs which can be capitalised in respect of this project for the year ended 31 December 2023.
ABC Co. had these loans outstanding for the year 2020: Specific Loan: P1,000,000 at 10% General Loan P20,000,000 at12%. The company began a self-construction of a building on January 1, 2020 and was completed on December 31, 2020. The following expenditures were made during 2020: January 1:P1,000,000 July 1: P2,000,000 November 1: P3,000,000 Total: P6,000,000 The cost of constructed building on December 31, 2020 must be
ABC Co. had these loans outstanding for the year 2020: Specific Loan: P1,000,000 at 10% General Loan P20,000,000 at12%. The company began a self-construction of a building on January 1, 2020 and was completed on December 31, 2020. The following expenditures were made during 2020: January 1:P1,000,000 July 1: P2,000,000 November 1: P3,000,000 Total: P6,000,000. How much is the cost of constructed building on December 31, 2020? P6,000,000 P6,250,000 P6,280,000 P6,300,000
On 1st January 2018, Global Drilling Ltd entered into a GHS22million contract for the construction of an office complex at Tema. The building was completed at the end of December 2018. During the period, thefollowing payments were made to the contractor:Payment date AmountGHS’m1 January 2018 2.0031 March 2018 6.0030 September 2018 12.0031 December 2018 2.0022.00Global Drilling’s borrowings as at its year end of 31st December 2018 were as follows: 10% 4-year Loan Note with simple interest payable annually, which relates specifically to the building project, loans outstanding at 31st December 2018 amounted to GHS7,000,000. Interest of GHS700,000 was incurred on these borrowings during the year, and interest income of GHS200,000 was earned on these funds while they were held in anticipation of payments. 12.5% Five-year Loan Note with simple interest payable annually; debt outstanding at 1st January 2018 amounted to GHS10,000,000 and remained unchanged during the year. 10% Five-year…
Road Ltd started construction of equipment, a qualifying asset in terms of IAS23 Borrowing costs, for its own use in 2020. Road Ltd finances the construction of the equipment through a general loan that bears interest at 10% per year, compounded annually. No repayments were made on the loan during 2021. R500 000 was incurred on the project during 2020. The following costs were incurred evenly (paid evenly during each month) during the construction of the equipment in 2021: 1 January 2021 - 31 May 2021: R50 000 per month 1 June 2021 - 31 December 2021: R40 000 per month Required Calculate the amount of borrowing costs that should be capitalised to the cost of the equipment for the year ended 31 December 2021.
On 1st January 2018, Global Drilling Ltd entered into a GHS22million contract for the construction of an office complex at Tema. The building was completed at the end of December 2018. During the period, the following payments were made to the contractor: Payment date Amount GHS’m1 January 2018 2.00 31 March 2018 6.00 30 September 2018 12.00 31 December 2018 2.00 22.00 Global Drilling’s borrowings as at its year end of 31st December 2018 were as follows:  10% 4-year Loan Note with simple interest payable annually, which relates specifically to the building project, loans outstanding at 31st December 2018 amounted to GHS7,000,000. Interest of GHS700,000 was incurred on these borrowings during the year, and interest income of GHS200,000 was earned on these funds while they were held in anticipation of payments.  12.5% Five-year Loan Note with simple interest payable annually; debt outstanding at 1st January 2018 amounted to GHS10,000,000 and remained unchanged during…