On January 1, 2022, Buffalo Outfitters signed a fixed-price contract to have Builder Associates construct...
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On January 1, 2022, Buffalo Outfitters signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of R$4,080,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2022, to finance the construction cost, Buffalo borrowed R$4,080,000 payable in 10 annual installments of R$408,000, plus interest at the rate of 10%. During 2022, Buffalo made deposit and progress payments totaling R$1,530,000 under the contract. The excess borrowed funds were invested in short-term securities, from which Buffalo realized investment income of R$51,000. What amount should Buffalo report as capitalized borrowing cost at December 31, 2022?
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