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An entity uses funds from its general borrowings to build a new production facility. Details...

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Accounting

An entity uses funds from its general borrowings to build a new production facility. Details of the entity's borrowings are shown below:

$10 million 6% loan

$6 million 8% loan

The entity used $12 million of these funds to construct the facility, which was under construction for the entire year.

How much interest should be capitalised as part of the cost of the asset?

$6750,000

$10,000,000

$12,000,000

$810,000

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