Answered step by step
Verified Expert Solution
Question
1 Approved Answer
d) On 1 July 2017, entity A entered into a GH 2.2 million contract for the construction of a building. The building was completed at
d) On 1 July 2017, entity A entered into a GH 2.2 million contract for the construction of a building. The building was completed at the end of June 2018. During the period, the following payments were made to the contractor: Payment date Amount (GH 000) 1 July 2017 200 30 September 2017 600 31 March 2018 1,200 30 June 2018 200 Total 2,200 Entity A's borrowings as at its year end of 30 June 2018 were as follows: 10% four-year note with simple interest payable annually, which relates specifically to the project; debt outstanding at 30 June 2018 amounted to GH 700,000. Interest of GHe 65,000 was incurred on these borrowings during the year, and interest income of GHe 20,000 was eamed on these funds while they were held in anticipation of payments. 12.5% 10-year note with simple interest payable annually; debt outstanding at 1 July 2017 amounted to GH 1,000,000 and remained unchanged during the year. 10% 10-year note with simple interest payable annually; debt outstanding at 1 July 2017 amounted to GH1,500,000 and remained unchanged during the year. Required: Calculate borrowing cost to be capitalized in accordance with IAS 23. (8 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started