BKAR2023 FINANCIAL ACCOUNTING AND REPORTING II Please answer Not in handwriting as soon as possible, (thanks in advance)

TopElectronic Bhd is a manufacturer and supplier of electronic and computer devices. It operates in Kulim Hi-Tech, Kedah. The company closes its account on every 31 December. The company has a piece of land which acquired in 2017 for RM700,000 and a factory that was built in early 2018 at a cost of RM1,250,000.

Since the outbreak of Covid-19, there has been a boom of demand for electronic and computer devices. The company decided to construct a new office building on 1 May 2019 and the construction is expected to complete on 31 December 2020. The company obtained a 3-year term loan of RM500,000 with 5% interest rate from Megah Bank on 1 July 2019 to finance the construction of the office building. The following expenditures were incurred during the construction period:

Date RM 1 May 2019 270,000 3 July 2019 150,000 29 September 2019 450,000 2 Mac 2020 75,000 1 June 2020 120,000 30 November 2020 150,000

In addition, TopElectronic has other outstanding loans: i. 5-year note payable of RM800,000, with an interest rate of 12% per annum dated 1 October 2018; and ii. 10-year, 10% bond payable of RM1,500,000 dated 1 January 2019.

At the end of every year, the company will conduct an impairment test if there is an indication of impairment for the land and factory. In 2019, the factory fair value was RM950,000 and the estimated selling cost to be was 5% of its fair value. In addition, the present value of future net cash flow from the factory was RM910,000. Then, the revalued amount of the factory for the year ended 31 December 2020 was RM900,000. For the land, the revalued amount for the year ended 31 December 2019 was RM500,000. In the following year, the price of the land was increased to RM850,000 due to the announcement that the government will build a new international airport near to the land.

Moreover, in the middle of 2019, the government has offered the company RM450,000 grant to buy a new machine to support the production of electronic appliances. The new machine cost was RM750,000 with a useful life of 6 years. After 12 months of used, the machine broke down and the company spent RM80,000 to repair the machine. The repair involved an installation of a new software that is expected to increase the useful life and the efficiency of the machine.

Additional information: 1. TopElectronic Bhd closes its account on every 31 December. 2. The useful life of the factory building is 15 years, and TopElectronic Bhd uses the sum-of-the-years digits (SYD) method to record the depreciation. 3. TopElectronic Bhd adopts a revaluation model to account for its factory and land. The land is revalued every year, but the factory is revalued every three year.

REQUIRED: (Round your answer to the whole number) (a) Calculate the interest to be capitalized for the construction of the new office building during 2019 and 2020.