IFRS-CH10-Solution - $5,000,000 x 12 = $600,000 3,000,000 x...

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IFRS – Practice Problem Solution – CH. 10 A) Average accumulated expenditures for 2009: January 2, 2009 $ 600,000 x 12/12 = $ 600,000 March 31, 2009 1,200,000 x 9/12 = 900,000 June 30, 2009 800,000 x 6/12 = 400,000 September 30, 2009 600,000 x 3/12 = 150,000 December 31, 2009 400,000 x 0/12 = - 0 - $2,050,000 Interest capitalized: $2,050,000 - 1,500,000 x 8.0% = $120,000 550,000 x 10.5% * = 57,750 $177,750 = interest capitalized * Weighted-average rate of all other debt:
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Unformatted text preview: $5,000,000 x 12% = $600,000 3,000,000 x 8% = 240,000 $8,000,000 $840,000 $840,000 = 10.5% $8,000,000 B) IAS No. 23, as originally issued, allowed a company to choose between (1) capitalization and (2) immediate expensing of interest incurred during the construction period. In 2007, IAS No. 23 was revised to require capitalization of interest. So, Fresh Start Company must capitalize $177,750 in interest as with U.S. GAAP....
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This note was uploaded on 11/30/2010 for the course BUSINESS 4230 taught by Professor Dee during the Spring '10 term at Community College of Denver.

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