ABC Corporation funded the construction of its new plant through both specific and general borrowing. Details are as follows: Date Amount Spent Jan. 1, 2021 4,800,000 Oct. 30, 2021 6,000,000 Borrowing Interest Rate Principal amt. Investment Income Specific 7% 5,000,000 100,000 General 10% 10,000,000 50,000 10. How much is the average carrying value of the equipment during the year? 11. How much is the capitalizable borrowing cost for the year? 12. How much is the interest expense to be reported in the income statement for the year?
ABC Corporation funded the construction of its new plant through both specific and general borrowing. Details are as follows: Date Amount Spent Jan. 1, 2021 4,800,000 Oct. 30, 2021 6,000,000 Borrowing Interest Rate Principal amt. Investment Income Specific 7% 5,000,000 100,000 General 10% 10,000,000 50,000 10. How much is the average carrying value of the equipment during the year? 11. How much is the capitalizable borrowing cost for the year? 12. How much is the interest expense to be reported in the income statement for the year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Corporation funded the construction of its new plant through
both specific and general borrowing. Details are as follows:
| Date | Amount Spent |
| Jan. 1, 2021 | 4,800,000 |
| Oct. 30, 2021 | 6,000,000 |
| Borrowing | Interest Rate | Principal amt. | Investment Income |
| Specific | 7% | 5,000,000 | 100,000 |
| General | 10% | 10,000,000 | 50,000 |
10. How much is the average carrying value of the equipment
during the year?
11. How much is the capitalizable borrowing cost for the year?
12. How much is the interest expense to be reported in the
income statement for the year?
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