Question
Entity A is a local construction company, which provides construction services to different types of customers. To prepare for the company development, Entity A planned
Entity A is a local construction company, which provides construction services to different types of customers. To prepare for the company development, Entity A planned to set up a new factory in secure stable more future economic benefits.
Entity A has the following bank loans during year 2020:
- $5,646,500 of 6.25% long-term bank loan
- $4,565,000 of 8.25% short-term bank loan
The construction of the new factory started from 1 March 2020 to 30 November 2020.
Entity A spent expenditures of $3,456,500 on 1 March 2020 for the construction of the new factory.
The end of the reporting period is 31 December.
REQUIRED:
Measure the borrowing costs should be capitalised.
ANSWER:
The capitalisation rate is _____________%.
The borrowing costs should be capitalised is $_______________.
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