Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Jambu Bhd has the following borrowings outstanding as at 31 December 2020: Borrowings 6% Redeemable Preference Shares 4% Term Loan 2% Loan Stock 3% Debenture
Jambu Bhd has the following borrowings outstanding as at 31 December 2020: Borrowings 6% Redeemable Preference Shares 4% Term Loan 2% Loan Stock 3% Debenture 4.5% Bond Amount (RM) 4,000,000 5,000,000 7,000,000 10,000,000 2,000,000 The 6% redeemable preference shares were issued to fund setting up of the business operation while the 4.5% bond was used for the purpose of Bit-Coin investment. The remaining borrowings were then used to fund construction of a factory which cost RM20 million. Construction began on 1 January 2020. Expenditure drawn down for the construction was RM12 million on 1 January 2020 and RM8 million on 1 May 2020. Required: (a) Compute capitalization rate for the general borrowings in constructing the factory. (10 marks) (b) Compute total borrowing costs to be capitalized for the factory for the year ended 31 December 2020
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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