7. An entity imported machinery to install in its new factory premises before year-end. However, due to circumstances beyond its control, the machinery was delayed by a few months but reached the factory premises before year-end. While this was happening, the entity learned from the bank that it was being charged interest on the loan it had taken to fund the cost of the plant. What is the proper treatment of freight and interest expense under IAS 16? a) Both expenses should be capitalized b) Interest may be capitalized but freight should be expensed c) Freight charges may be capitalized but interest cannot be capitalized under these circumstances d) Both expenses should be expensed