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In light of increased demand for solar energy, Green Energy Limited (GEL) decides to build an additional solar power plant, which can meet the definition
In light of increased demand for solar energy, Green Energy Limited ("GEL") decides to build an additional solar power plant, which can meet the definition of a qualifying asset. The total cost of the plant is $84 million, with construction begun on 1 July 2020 . Expenditures of $30 million was paid at the time construction began. Another $12 million expenditures were paid on 1 October 2020. The remaining cost will be paid upon completion of the construction project on 30 June 2022. GEL borrowed a 2-year loan of $40 million on 1 July 2020 specifically to finance the solar power plant. The interest rate is 8%. Interest income of $0.2 million was generated in the current year for temporary investment of surplus funds. GEL has a 6-year loan to support its general operations. The loan principal is $70 million which has been outstanding throughout the current year. The interest rate is 10%. Interest is to be paid on every 30 June. Required: For the current year end of 30 June 2021, prepare all necessary journal entries to account for the borrowing costs incurred in accordance with IAS 23 Borrowing Costs. In light of increased demand for solar energy, Green Energy Limited ("GEL") decides to build an additional solar power plant, which can meet the definition of a qualifying asset. The total cost of the plant is $84 million, with construction begun on 1 July 2020 . Expenditures of $30 million was paid at the time construction began. Another $12 million expenditures were paid on 1 October 2020. The remaining cost will be paid upon completion of the construction project on 30 June 2022. GEL borrowed a 2-year loan of $40 million on 1 July 2020 specifically to finance the solar power plant. The interest rate is 8%. Interest income of $0.2 million was generated in the current year for temporary investment of surplus funds. GEL has a 6-year loan to support its general operations. The loan principal is $70 million which has been outstanding throughout the current year. The interest rate is 10%. Interest is to be paid on every 30 June. Required: For the current year end of 30 June 2021, prepare all necessary journal entries to account for the borrowing costs incurred in accordance with IAS 23 Borrowing Costs
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