At the start of the current financial period (January 1, 2015) Octagon Incorporation Limited had non-current assets totaling $45m. Demand for the companys products increased significantly and as a result the companys management embarked on an expansion drive to increase the firms capacity to meet the increase demand. The following transactions took place during the current financial year:

On January 1, 2015 the company obtained a loan of $10.5m to finance new equipment which would not only increase efficiency but also productivity. The rate of interest on the loan was 15 percent per annum. The equipment was installed on 31 December 2015.

On June 1 2015, the company took another loan of $8.5m from a bank at an annual interest rate of 20%. The purpose of this loan was to finance the construction of a new factory. The construction of the factory started on 1 June 2015 and $450,000 from the loan was used for general purposes.

A loan of $3.5m was also obtained on March 1, 2015 for working capital purposes and the rate of interest on this loan was 10 percent per annum.

The company has investment properties as part of its portfolio. On October 1, 2015 the company obtained a loan of $25m to construct a warehouse which would form part of its investment portfolio. The interest on the loan was 17.5 percent per annum and interest income of $150,000 was earned on the loan during the period.

Required:

Identify the criteria to be satisfied in order for borrowing costs to be capitalized according to IAS 23?

Explain the term qualifying assets in regard to IAS 23?

Calculate the borrowing costs to be capitalized as at 31 December 2015? (