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 ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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:

  1. 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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