Use the following information for the following questions: Smooth Pass Corp. has three sources of borrowings in an accounting period: Outstanding Liabilities Interest Change Seven-year loan 8,000,000 1,000,000 25-year loan 12,000,000 1,000,000 Bank overdraft 4,000,000 600,000 QUESTIONS: If all of the borrowing are used to finance the production of a qualifying asset, but none of the borrowings relate to a specific qualifying asset, what is the capitalization rate? a. 9.67% b. 10%. c.10.83% d.11.33 % 2. If the seven-year loan is an amount which can be specifically identified with a qualifying asset, what is capitalization rate? a. 9.67%. b. 10%. c. 10.83% d. 11.33%
Use the following information for the following questions: Smooth Pass Corp. has three sources of borrowings in an accounting period: Outstanding Liabilities Interest Change Seven-year loan 8,000,000 1,000,000 25-year loan 12,000,000 1,000,000 Bank overdraft 4,000,000 600,000 QUESTIONS: If all of the borrowing are used to finance the production of a qualifying asset, but none of the borrowings relate to a specific qualifying asset, what is the capitalization rate? a. 9.67% b. 10%. c.10.83% d.11.33 % 2. If the seven-year loan is an amount which can be specifically identified with a qualifying asset, what is capitalization rate? a. 9.67%. b. 10%. c. 10.83% d. 11.33%
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
Chapter6: Accounting Quality
Section: Chapter Questions
Problem 4QE
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Question
Use the following information for the following questions:
Smooth Pass Corp. has three sources of borrowings in an accounting period:
Outstanding Liabilities | Interest Change | |
Seven-year loan | 8,000,000 | 1,000,000 |
25-year loan | 12,000,000 | 1,000,000 |
Bank overdraft | 4,000,000 | 600,000 |
QUESTIONS:
- If all of the borrowing are used to finance the production of a qualifying asset, but none of the borrowings relate to a specific qualifying asset, what is the capitalization rate?
a. 9.67% b. 10%. c.10.83% d.11.33 %
2. If the seven-year loan is an amount which can be specifically identified with a qualifying asset, what is capitalization rate?
a. 9.67%. b. 10%. c. 10.83% d. 11.33%
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