Quality Homes Ltd took a bank loan on 1st May 2018, for $1 000000 at the interest rate of ( 5 % ). The purpose of this loan was to finance the construction of a production hall. The construction started on 1 June 2018. The company temporarily invested ( $ 800000 ) of the borrowed money during the months of June and July 2018 at the rate of ( 2 % ) p.a. Calculate the borrowing cost to be capitalised in 2018 . (6 marks)

Quality Homes Ltd took a bank loan on Ist May 2018, for $1000000 at the annual interest rate of 5%. The purpose of this loan was to finance the construction of a production hall. The construction started on 1 June 2018. The company temporarily invested $800000 of the borrowed money during the months of June and July 2018 at the rate of 2% p.a. Calculate the borrowing cost to be capitalised in 2018. (6 marks)