Reference no: EM132950816

Questions -

Q1. On January 1, 20x1, Entity A obtained a 12%, 6,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income of 180,000. The construction was completed on December 31, 20x1 for a total construction cost of 7,000,000. How much is the historical cost of the newly constructed building?

a. 7,540,000 c. 7,000,000

b. 7,480,000 d. 6,460,000

Q2. ABC Co. made expenditures for the following:

Cost in activities aimed at obtaining new knowledge 10,000

Marketing research to study consumer tastes 5,000

Cost of developing and producing a prototype model 3,000

Cost of testing the prototype model for safety and environmental friendliness 40,000

Cost revising designs for flaws in the prototype model 15,000

Salaries of employees, consultants, and technicians involved in R&D 20,000

Cost of conference for the introduction of the newly developed product including fee of a model hired as endorser 100,000

Advertising to establish recognition of the newly developed product 30,000

How much is recognized as research and development expense?

a. 68,000

b. 72,000

c. 88,000

d. 94,000