please assist with Part a required 1.1 and 1.2 as well as part b required 1.3

1. Briefly explain which portion of the borrowing costs from the different sources of finances may be capitalized in terms of the requirements of IAS 23 borrowing costs.(based on picture below)

2. Calculate the borrowing costs which may be capitalized for the financial ywars ended 31 December 2018 and 31 December 2019. Assume the Cynch Bank Ltd compounds interest annually on 31 December. (based on picture below)

Part B

On 30 September 2019 Zebra Ltd started with the construction of a plant which will take a considerable period to complete. The expenses on the project were paid as follows:

30/09/2019 = $50,000

31/10/2019 = $20,000

30/11/2019 = $60,000

31/12/2019 = $80,000

The year end of Zebra Ltd is 31 December of each year.

Case 1

A loan of $300,000 was acquired on 30/09/2019 specifically for purpose of erection of the plant. the loan carries interest at a market related interest of 16% per annum, payable annually in arrears. the full loan was taken up on 30/09/2019. surplus funds that resulted from the loan were invested temporarily and earned interest income of $10,000.

Case 2

The erection of the plant is financed by way of a loan of $500,000 that Zebra Ltd entered into on 01/07/2019 for general business purposes. the loan carries interest at a market related rate of 18% per annum that is payable monthly.

Case 3

The erection of the plant is financed by way of a facility of $300,000 that was acquired on 30/09/2019 specifically for purpose of financing the erection of the plant. the facility carries interest at a market related interest rate of 16% per annum payable monthly in arrears..

1. For each of the cases above, calculate the borrowing costs to be capitalized for 2019.

QUESTIONI (BORROWING COSTS LAS 23) Mark) Parts Med prove the past few yeand the pleca flow of why the mid 2017 Du 017 decid under name. This programme comced in 2013 Required 11 Teaty explain waid portion of the bonowing costs from the des Source office may be capitained in terms of the requirements of IAS 23 ewig 12 Cele loot which may be capitained for the cal 15 your med 31 December 2015 and 1 December 2019 in accordance with IFRS. Cynthonk Lid wounde interest December Part 000 NSS 0000 lontera Coc 100 m repuyable in your 2010. Time of 300 000 per past Om 10 September 2019 Zbu Lidsarted with the construction of all we will take considerable period of time to complete. The person the project we paid as follows Perled NS 30 September 2010 50 000 20 000 30 November 31 December 2010 90000 NESCO F The answered Ladyboy 2015 20 ROLE ROL 3100 NS 500 000 000 250000 350.000 300D 0 A 2010 Completi od 1 May 2010 Clatrodymintiespect of landbrug The will be des May 2019 Into the former with of the play 2010. de from the N52 000 000 www.lable to this is onder to face the 2. This supplier of love the rest April 2011 The Snace les post will be det samme. The will on May 2013 The youend of Zebe 31 December of each year. The following is reallable Cat Aon of 300 000 was 30 September 2019 pecifically for purpose oferection of the plantThe interest w market related merest rate of 10 perwm, payable ally in areas. The follow up 30 September 2010. Surplus funds that shed from the lo were investemporarily and came income of NS10000 Case The section of the plant is financed by way of a loan of NS500 000 that Zebra med into July 2016 for business per the locaties et tarkat related me of 18% per that is payable monthly CM 3: The motion of the plant is fenced by ww of scility of NS300 000 that was required 30 September 2019 specifically for purpose of financing the creation of the plant. The facility cames Infestata maskot voordele of 10 pe payable monthly in Required 15 For each of the cases bow called the bottowing come to be capitalized for 15 2019 10/10 Page 1 of 20 QUESTION 1 (BORROWING COSTS: IAS 23) (40 Marks) Parta Manning Ltd has reported good profits over the past few years and the positive cash flow resulted in the repayment of all interest-bearing debt by the end of 2017. During 2017 it was decided to undertake a substantial expansion programme. This expansion programme commenced in 2018 and details thereof are as follows: Description Amount Financing Land NS500 000 80% mortgage loan at 18% per annum from Cynch Bank Buildings NSI 500 000 80% mortgage loan at 18% per annum at Cynch Bank Plant N52 000 000 100% loan @ 20% per annum repayable over 5 years commencing 1 January 2019. Factory N$500 000 Finance lease of N$200 000 per annum payable in equipment arrears over 4 years The assets were acquired as follows: Land: payment on transfer on 1 February 2018 Buildings commencement of construction activities on 1 January 2018 Progress payments NS 30 April 2018 500 000 31 July 2018 250 000 31 October 2018 250 000 31 January 2019 250 000 30 April 2019 250 000 Completion of building -1 May 2019 Cash on hand was used to make 20% of each payment in respect of land and buildings 1. Plant The plant will be brought into use on 1 May 2019 but payment to the foreign supplier will be made on shipment of the plant on 31 January 2019. Funds from the NS2 000 000 loan are available from this date in order to finance the purchase. 2. Factory equipment. The supplier of the equipment undertook to deliver the equipment on 1 April 2019. The finance Icase agreement will be concluded on the same date. This equipment will also be brought into use on 1 May 2019. QUESTIONI (BORROWING COSTS LAS 23) Mark) Parts Med prove the past few yeand the pleca flow of why the mid 2017 Du 017 decid under name. This programme comced in 2013 Required 11 Teaty explain waid portion of the bonowing costs from the des Source office may be capitained in terms of the requirements of IAS 23 ewig 12 Cele loot which may be capitained for the cal 15 your med 31 December 2015 and 1 December 2019 in accordance with IFRS. Cynthonk Lid wounde interest December Part 000 NSS 0000 lontera Coc 100 m repuyable in your 2010. Time of 300 000 per past Om 10 September 2019 Zbu Lidsarted with the construction of all we will take considerable period of time to complete. The person the project we paid as follows Perled NS 30 September 2010 50 000 20 000 30 November 31 December 2010 90000 NESCO F The answered Ladyboy 2015 20 ROLE ROL 3100 NS 500 000 000 250000 350.000 300D 0 A 2010 Completi od 1 May 2010 Clatrodymintiespect of landbrug The will be des May 2019 Into the former with of the play 2010. de from the N52 000 000 www.lable to this is onder to face the 2. This supplier of love the rest April 2011 The Snace les post will be det samme. The will on May 2013 The youend of Zebe 31 December of each year. The following is reallable Cat Aon of 300 000 was 30 September 2019 pecifically for purpose oferection of the plantThe interest w market related merest rate of 10 perwm, payable ally in areas. The follow up 30 September 2010. Surplus funds that shed from the lo were investemporarily and came income of NS10000 Case The section of the plant is financed by way of a loan of NS500 000 that Zebra med into July 2016 for business per the locaties et tarkat related me of 18% per that is payable monthly CM 3: The motion of the plant is fenced by ww of scility of NS300 000 that was required 30 September 2019 specifically for purpose of financing the creation of the plant. The facility cames Infestata maskot voordele of 10 pe payable monthly in Required 15 For each of the cases bow called the bottowing come to be capitalized for 15 2019 10/10 Page 1 of 20 QUESTION 1 (BORROWING COSTS: IAS 23) (40 Marks) Parta Manning Ltd has reported good profits over the past few years and the positive cash flow resulted in the repayment of all interest-bearing debt by the end of 2017. During 2017 it was decided to undertake a substantial expansion programme. This expansion programme commenced in 2018 and details thereof are as follows: Description Amount Financing Land NS500 000 80% mortgage loan at 18% per annum from Cynch Bank Buildings NSI 500 000 80% mortgage loan at 18% per annum at Cynch Bank Plant N52 000 000 100% loan @ 20% per annum repayable over 5 years commencing 1 January 2019. Factory N$500 000 Finance lease of N$200 000 per annum payable in equipment arrears over 4 years The assets were acquired as follows: Land: payment on transfer on 1 February 2018 Buildings commencement of construction activities on 1 January 2018 Progress payments NS 30 April 2018 500 000 31 July 2018 250 000 31 October 2018 250 000 31 January 2019 250 000 30 April 2019 250 000 Completion of building -1 May 2019 Cash on hand was used to make 20% of each payment in respect of land and buildings 1. Plant The plant will be brought into use on 1 May 2019 but payment to the foreign supplier will be made on shipment of the plant on 31 January 2019. Funds from the NS2 000 000 loan are available from this date in order to finance the purchase. 2. Factory equipment. The supplier of the equipment undertook to deliver the equipment on 1 April 2019. The finance Icase agreement will be concluded on the same date. This equipment will also be brought into use on 1 May 2019