Determine the original cost of the bridge

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Reference no: EM133265009

Andy company is building a new bridge that takes 18 months to complete. On 1st January 2020, it got a bank loan of $5,000,000 for 5 years at an interest rate of 8%/year for financing the construction. On 1st February 2020, it began to pay construction costs. Due to the actual conditions at the construction site, the bridge was flooded in the period from July to September. Thus, the construction cannot be carried out during this period (the Company has anticipated this).The total cost of building the bridge to completion is $5,000,000. Since construction costs are gradually eliminated according to the construction progress, there is a temporary income from the above loan of $100,000 during the construction period.

Requiremeent: Determine the original cost of the bridge and annual depreciation charges

Reference no: EM133265009

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