On September 1, 2019, Gore Industries Limited started construction of its new office building and completed it on May 31, 2020. The payments made to the contractor were as follows:

Date of Payments Amount

September 1, 2019 $10,000,000

December 1, 2019 $15,000,000

February 1, 2020 $12,000,000

June 1, 2020 $ 9,000,000

In addition to the above payments, Gore Industries paid a fee of $8,000,000 on September 1, 2019 for obtaining a permit allowing the construction of the building. The project was finance through the following sources:

On August 1, 2019, a medium term loan of $

25,000,000 was obtained specifically for the

construction of the building. The loan was at an interest rate of 12% per annum. A commitment fee of $125,000 was charged by the bank.

Surplus funds were invested in a savings account at 8% per annum.

Existing finance facilities at Gore Industries are:

Running finance facility from BNS of $25,000,000 at an interest rate of 13%

per annum

Running finance facility from Sagicor of $25,000,000. The interest accrued during the period of construction was $3,000,000 and the balance on the facility during that period was $20,000,000.

Required:

(A) In accordance with IAS 23, calculate the amount to be capitalized on June 30, 2020. All Workings must be clearly shown. Marks will be awarded for workings. (20 marks)

(B) Zenith Corporation is a large construction company whose financial statements are prepared using International Financial Reporting Standards.