ABC Construction company built a new headquarter building for its own use. The construction started on 1 January N and ended on 30 September N1, and the construction cost was 50 million (30 million in N and 20 million in N1). To finance the construction, ABC contracted a bank loan of 30 million on 1 January N (interest rate 7 %) and a second bank loan of 20 million on 1 January N1 (interest rate 8 %). Payments on both loans are made starting 1 January N2. The building has a useful life of 50 years and is depreciated on a straight-line basis.

a) What are the financial statement impacts for ABC in respect of this construction in N?

b) What are the financial statement impacts for ABC in respect of this construction in N1?