Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: 18% 5-year loan Note of R1,500,000 14% Debentures of R1,000,000 Expenditures on the project were made as follows: On the 31st March 2019, R600,000 was incurred; R800,000 was incurred on 30th June 2019; The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount borrowing costs to capitalized and expensed. I. II. I. II. III.

Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: 18% 5-year loan Note of R1,500,000 14% Debentures of R1,000,000 Expenditures on the project were made as follows: On the 31st March 2019, R600,000 was incurred; R800,000 was incurred on 30th June 2019; The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount borrowing costs to capitalized and expensed. I. II. I. II. III.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 18PC

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asap Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.
Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding:I. 18% 5-year loan Note of R1,500,000II. 14% Debentures of R1,000,000Expenditures on the project were made as follows:I. On the 31st March 2019, R600,000 was incurred;II. R800,000 was incurred on 30th June 2019;III. The final expenditure incurred was R300,000 on 31st December 2019.During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum.Required: Determine the amount of borrowing costs to be capitalized and expensed.
No. One Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.
ABC Co. had these loans outstanding for the year 2020: Specific Loan: P1,000,000 at 10% General Loan P20,000,000 at12%. The company began a self-construction of a building on January 1, 2020 and was completed on December 31, 2020. The following expenditures were made during 2020: January 1:P1,000,000 July 1: P2,000,000 November 1: P3,000,000 Total: P6,000,000 The cost of constructed building on December 31, 2020 must be
Acruni Co. had the following loans in place at the beginning of 2019. 1 January 2019 GHC m 10% Bank loan repayable 2020 9.5% Bank loan repayable 2021 8.9% debenture repayable 2024 120 80 100 On 1 January 2019, Acruni Co began construction of a qualifying asset, a piece of machinery for a hydroelectric plant, using existing borrowings. Expenditure drawn down for the construction was GHC30 million on 1 January 2019, and GHC20 million on 1 October 2019. Surplus funds were invested temporarily at a rate of 2%. Required a) Calculate the borrowing costs that can be capitalized for the piece of machinery. b) Compute the cost of the machinery that will be reported in the statement of financial position as at December, 2019 ATES)
Carriageways Co had the following bank loans outstanding during the whole of 2023 which form the company’s general borrowings for the year: £m 9% loan repayable 20X9 15 11% loan repayable 20Y2 24 Carriageways Ltd began construction of a qualifying asset on 1 April 2023 and withdrew funds of £6 million on that date to fund the construction. On 1 August 2023 an additional £2 million was withdrawn for the same purpose. Calculate the borrowing costs which can be capitalised in respect of this project for the year ended 31 December 2023.
ABC Co. had these loans outstanding for the year 2020: Specific Loan: P1,000,000 at 10% General Loan P20,000,000 at12%. The company began a self-construction of a building on January 1, 2020 and was completed on December 31, 2020. The following expenditures were made during 2020: January 1:P1,000,000 July 1: P2,000,000 November 1: P3,000,000 Total: P6,000,000. How much is the cost of constructed building on December 31, 2020? P6,000,000 P6,250,000 P6,280,000 P6,300,000
QUESTIO 1 Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.
On January 1, 2021, the company obtained a $3 million loan with a 11% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 On January 1, 2021, the company obtained a $3 million construction loan with a 11% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $5,100,000 and $7,100,000 with interest rates of 7% and 9%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2. What is the total cost of the building? 3. Calculate the…
quest 1 Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.
On January 1, 2021, the company obtained a $3 million loan with a 10% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 March 1, 2021 June 30, 2021 October 1, 2021 January 31, 2022 April 30, 2022 August 31, 2022 On January 1, 2021, the company obtained a $3 million construction loan with a 10% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company's other interest-bearing debt included two long-term notes of $4,400,000 and $6,400,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company's fiscal year-end is December 31. $1,300,000 720,000 340,000 640,000 450,000 765,000 1,260,000 Required: 1. Calculate the amount of interest that Mason should capitalize in 2021 and 2022 using the weighted-average method. 2.…
Road Ltd started construction of equipment, a qualifying asset in terms of IAS23 Borrowing costs, for its own use in 2020. Road Ltd finances the construction of the equipment through a general loan that bears interest at 10% per year, compounded annually. No repayments were made on the loan during 2021. R500 000 was incurred on the project during 2020. The following costs were incurred evenly (paid evenly during each month) during the construction of the equipment in 2021: 1 January 2021 - 31 May 2021: R50 000 per month 1 June 2021 - 31 December 2021: R40 000 per month Required Calculate the amount of borrowing costs that should be capitalised to the cost of the equipment for the year ended 31 December 2021.