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KLM had the following loans in place at the beginning and end of 2011: Description 1 January 2011 Bank loan 6% p.a. 200, 000 Bank
KLM had the following loans in place at the beginning and end of 2011:
Description | 1 January 2011 |
Bank loan 6% p.a. | 200, 000 |
Bank loan 8% p.a. | 130, 000 |
Debenture stock 5.5% p.a. | 50, 000 |
The bank loans were taken for no specific purpose and KLM used them to finance general spending and the construction of a new machinery.
KLM used GHc 220 000 for the construction of the machinery in 2011.
Required:
What borrowing cost should be capitalized for the new machinery in 2011?
Determine the cost of the machinery that will be shown in the statement of financial position
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