AeraAela Bhd is a manufacturing company located at Klang Valley. In year $2020,$ AeraAela Bhd acquired a land with an old building on it for RM$5,000,000.$ Shortly after the acquisition, the building was demolished at a cost of RM$50,000.$ AeraAela Bhd entered into a RM$3,000,000$ fixed$-$price contract with DaFat Bhd on $1$ March $2021$ for the construction of a new building on the acquired land. The building was completed and ready to be occupied by $30$ September $2022.$ The following payments were made during the construction period:

Date Expenditure

$2021$

$1$ March RM$450,000$

$1$ June RM$410,000$

$1$ August RM$560,000$

$1$ November RM$750,000$

$2022$

$1$ April RM$300,000$

$1$ July RM$250,000$

$30$ September RM$280,000$

The building is estimated to have a useful life of $30$ years with no residual value and will be depreciated using the straight$-$line method. To finance the construction cost AeraAela Bhd borrowed RM$2,000,000$ at a $10\%$ annual interest rate on $1$ March $2021,$ payable annually on $31$ December for five years. The excess from the construction loan was invested to earn a return. From this excess, AeraAela Bhd earned investment revenue of RM$90,000$ and RM$30,000$ for the years $2021$ and $2022.$ Besides, AeraAela Bhd had two debt obligations outstanding during $2021$:

$1.10\%,$ RM$1,000,000,2-$year note payable, dated $31$ December $2019,$ with interest payable annually on $31$ December.

$2.12\%,$ RM$1,500,000,3-$year bond issued $31$ December $2018,$ with interest payable annually on $31$ December.

At the end of year $2022,$ AeraAela Bhd tested a machine for impairment. The carrying amount of the machine is RM$150,000$ with an estimated useful life of five years. The machine recoverable amount is determined on the basis of value in use, at a discount rate of $10\%$ as there is no information about the value of the machine in a market. Based on the analysis by the company, it indicates that its future cash flows will be RM$20,500$ each year for five years, and it will receive a residual value of RM$5,000$ at the end of year five. In previous year, the impairment loss of the machine was recognised at RM$75,000.$

Further, at the end of year $2022,$ AeraAela Bhd revalued its warehouse for the first time. The warehouse was purchased on $30$ June $2020$ for RM$500,000.$ It has a $10-$year useful life with no residual value. The following information related to the warehouse.

Year Fair Value $($RM$)$

$31$ December $2022$ RM$450,000$

$31$ December $2023$ RM$400,000$

The company's accounting year$-$end is $31$ December every year and it uses revaluation model for subsequent measurement of its non$-$current assets.

REQUIRED:

$($Show all workings and round the answers to the whole number.$)$

$($a$)$ Determine the amount of borrowing cost to be capitalised in relation to the construction of the new building for the years $2021$ and $2022.$

$($b$)$ Prepare journal entries to record the capitalisation of interest and interest expense $($if any$)$ for the years $2021$ and $2022.$

$($c$)$ Prepare journal entries in relation to impairment loss $($if any$)$ for machine in year $2022.($Refer present value tables in Appendix for computation$).$

$($d$)$ Prepare journal entries related to the warehouse for the years $2022$ and $2023.$

Present value interest factor of RM$1$ per period at i$\%$ for n periods, PVIF $($i$,$n$)$ Period

Present Value Table:

$1\%2\%3\%4\%5\%6\%7\%8\%9\%10\%$

$10\mathrm{.}990100\mathrm{.}980390\mathrm{.}970870\mathrm{.}961540\mathrm{.}952380\mathrm{.}943400\mathrm{.}934580\mathrm{.}925930\mathrm{.}917430\mathrm{.}90909$

$20\mathrm{.}980300\mathrm{.}961170\mathrm{.}942600\mathrm{.}924560\mathrm{.}907030\mathrm{.}890000\mathrm{.}873440\mathrm{.}857340\mathrm{.}841680\mathrm{.}82645$

$30\mathrm{.}970590\mathrm{.}942320\mathrm{.}915140\mathrm{.}889000\mathrm{.}863840\mathrm{.}839620\mathrm{.}816300\mathrm{.}793830\mathrm{.}772180\mathrm{.}75131$

$40\mathrm{.}960980\mathrm{.}923850\mathrm{.}888490\mathrm{.}854800\mathrm{.}822700\mathrm{.}792090\mathrm{.}762900\mathrm{.}735030\mathrm{.}708430\mathrm{.}68301$

$50\mathrm{.}951470\mathrm{.}905730\mathrm{.}862610\mathrm{.}821930\mathrm{.}783530\mathrm{.}747260\mathrm{.}712990\mathrm{.}680580\mathrm{.}649930\mathrm{.}62092$

$60\mathrm{.}942050\mathrm{.}887970\mathrm{.}837480\mathrm{.}790310\mathrm{.}746220\mathrm{.}704960\mathrm{.}666340\mathrm{.}630170\mathrm{.}596270\mathrm{.}56447$

$70\mathrm{.}932720\mathrm{.}870560\mathrm{.}813090\mathrm{.}759920\mathrm{.}710680\mathrm{.}665060\mathrm{.}622750\mathrm{.}583490\mathrm{.}547030\mathrm{.}51316$

$80\mathrm{.}923480\mathrm{.}853490\mathrm{.}789410\mathrm{.}730690\mathrm{.}676840\mathrm{.}627410\mathrm{.}582010\mathrm{.}540270\mathrm{.}501870\mathrm{.}46651$

$90\mathrm{.}914340\mathrm{.}836760\mathrm{.}766420\mathrm{.}702590\mathrm{.}644610\mathrm{.}591900\mathrm{.}543930\mathrm{.}500250\mathrm{.}460430\mathrm{.}42410$

$100\mathrm{.}905290\mathrm{.}820350\mathrm{.}744090\mathrm{.}675560\mathrm{.}613910\mathrm{.}558390\mathrm{.}508350\mathrm{.}463190\mathrm{.}422410\mathrm{.}38554$

Present value interest factor of an $($ordinary$)$ annuity of RM$1$ per period at i$\%$ for n periods, PVOI $($i$,$n$)$

Period $1\%2\%3\%4\%5\%6\%7\%8\%9\%10\%$

$10\mathrm{.}990100\mathrm{.}980390\mathrm{.}970870\mathrm{.}961540\mathrm{.}952380\mathrm{.}943400\mathrm{.}934580\mathrm{.}925930\mathrm{.}917430\mathrm{.}90909$