FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Larkspur Utilities Corporation incurred the following costs in constructing a new maintenance building during the fiscal period:
Direct labour costs incurred up to the point when the building is in a condition necessary for use as management intended,
but before Larkspur begins operating in the building, $81,700
Additional direct labour costs incurred before Larkspur begins operating in the building, $5,770
Material purchased for the building, $82,500
Interest on the loan to finance construction until completion, $2,890
Allocation of variable plant overhead based on labour hours worked on the building, $34,000
f. Architectural drawings for the building, $7,750
Allocation of the president's salary, $56,700
a.
b.
C.
d.
e.
g.
What costs should be included in the cost of the new building if Larkspur prepares financial statements in accordance with IFRS? With
ASPE? (Assume that, if there is no specific guidance from GAAP, Larkspur's management would consider a building ready for
productive use when Larkspur begins operating in the building and would prefer not to capitalize interest costs directly attributable to
the acquisition, construction, or development of property, plant, and equipment.)
Total cost of new building
$
IFRS
ASPE
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Transcribed Image Text:Larkspur Utilities Corporation incurred the following costs in constructing a new maintenance building during the fiscal period: Direct labour costs incurred up to the point when the building is in a condition necessary for use as management intended, but before Larkspur begins operating in the building, $81,700 Additional direct labour costs incurred before Larkspur begins operating in the building, $5,770 Material purchased for the building, $82,500 Interest on the loan to finance construction until completion, $2,890 Allocation of variable plant overhead based on labour hours worked on the building, $34,000 f. Architectural drawings for the building, $7,750 Allocation of the president's salary, $56,700 a. b. C. d. e. g. What costs should be included in the cost of the new building if Larkspur prepares financial statements in accordance with IFRS? With ASPE? (Assume that, if there is no specific guidance from GAAP, Larkspur's management would consider a building ready for productive use when Larkspur begins operating in the building and would prefer not to capitalize interest costs directly attributable to the acquisition, construction, or development of property, plant, and equipment.) Total cost of new building $ IFRS ASPE
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