Business, 27.03.2021 03:30 annette211pdd8v9

Chegg Company, a U. S.-based company, borrows 4,500,000 Euros on January 1, Year 1, at an interest rate of 5.5% to finance the construction of a new branch in Spain. Construction is expected to take 9 months and cost euro 4,500,000. Chegg temporarily invests euro borrowed until cash is needed to pay costs. Interest earned in the first quarter of Year 1 is 4,000 euro. During the first quarter of Year 1, expenditures of euro 1,000,000 are incurred; the weighted-average expenditures are euro 800,000. Chegg will repay the borrowing plus interest on September 30, Year 1, by converting U. S. dollars into euro. The U. S. dollar/euro exchange rate was $1.1 on January 1, Year 1, and $1.20 on March 31, Year 1. The change in exchange rate is the result of the difference in interest rates in the United States and Europe. Required: Determine the amount of borrowing costs (in U. S. dollars) that Company should include in the cost of the new branch at March 31, Year 1, according to IFRS and US GAAP.

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Chegg Company, a U. S.-based company, borrows 4,500,000 Euros on January 1, Year 1, at an interest r...

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