Solution-Calculate the borrowing cost that beatrice should

Calculate the borrowing cost that beatrice should capitalize

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Reference no: EM133108038

Question - Beatrice Inc. is a publicly traded company. Beatrice started the construction of a new office building on Feb 1, 2021 and will finished it on April 30, 2022. The following information is related to the expenditures incurred during the construction in 2021:

Date	Expense
Feb 28	$480,000
June 1	220,000
Sep 30	170,000

Beatrice Inc. took out a one-year loan of $850,000 on May 1, 2021. The loan has an annual interest rate of 4.7%.

Beatrice's overall borrowings are as follows:

	Amount	Annual interest rate
A three-year Note payable, issued on May 1, 2020	450,000	5.2%
A two-year bank loan taken out on April 1, 2019	520,000	7%
A one-year bank loan taken out on September 30, 2021	320000	3.5%

Required - Calculate the borrowing cost that Beatrice should capitalize in 2021?

Reference no: EM133108038

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Calculate the borrowing cost that beatrice should capitalize

Reference no: EM133108038

Reference no: EM133108038

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