Reference no: EM132817689
CONVALESCE Co. started construction of a qualifying asset for RECOVER, Inc. on January 1, 20x1. The following were expenditures incurred on construction.
Date Expenditures
Year 20x1
January 1, 20x1 4,000,000
May 1, 20x1 1,800,000
December 1, 20x1 2,880,000
Year 20x2
January 1, 20x2 3,600,000
August 30, 20x2 1,200,000
Year 20x3
July 1, 20x3 2,400,000
COVALESCE Co. determined the capitalization rate to be 10%. The construction of the qualifying asset was substantially completed on September 30, 20x3.
Problem 1: How much is the capitalizable borrowing cost in 20x1?
a. 430,000
b. 445,0000
c. 544,000
d. 645,000
Problem 2: How much is the capitalizable borrowing cost in 20x2?
a. 1,233,400
b. 1,322,400
c. 1342,400
d. 1,440,400
Problem 3: How much is the capitalizable borrowing cost in 20x3?
a. 1,210,980
b. 1,233,400
c. 1,435,980
d. 1,580,980
Problem 4: How much is the total cost of the constructed qualifying asset on September 30, 20x3?
a. 18,957,830
b. 19,776,830
c. 13,765,380
d. 18,957,380