A company has three sources of borrowing:

Average loan in the year Interest expense incurred in the year

GHS GHS

7 year loan 8,000,000 800,000

10 year loan 10,000,000 900,000

Bank overdraft 5,000,000 900,000

The 7-year loan has been specifically raised to fund the building of a qualifying asset.

The company has incurred the following expenditure on a project funded from general borrowings for the year ended 31 December 2021.

Date incurred: Amount (GHS)

31 March 1,000,000

31 July 1,200,000

30 October 800,000

Required:

Calculate the amount to be capitalised in respect of capital work in progress during 2021.