Test: CPA Financial Accounting and Reporting (FAR)

1.

On January 2, Year 1, a company borrows $1.2 million on a note due in 10 years. Each year interest of 9% of the principal must be paid. Proceeds from the loan are used to finance the construction of a building. All proceeds are spent evenly throughout the year and the building is complete at the end of Year 1. At what amount is the building capitalized?

$1,308,000

$1,200,000

$1,254,000

$1,218,000

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