Question 2 [IAS23- Capitalisation of borrowing costs] Gled Limited began the construction of a new building on 1 February 2015. The building is a qualifying asset for the purposes of IAS23. Construction costs incurred in 2015 were paid as follows; Payment Date Amount On 1 February On 1 July On 1 November R500 000 R600 000 R800 000 (30) The construction of the building ended on 1 December 2015 when the building was complete and ready for its intended use. This building is to be depreciated over 10 years to a nil residual value using the straightline method. The construction was financed through a loan of R1 900 000 from Cash Limited. The loan was raised on 1 January 2015 specifically to facilitate the construction of the building. The interest rate is 25% per annum. There are no capital repayments during the year. Surplus funds were invested at 20% per annum. The interest is compounded annually. Required (a) Calculate the total interest incurred and total borrowing costs that must be capitalised during the year ended 31 December 2015 (12) (b) Calculate the depreciation for the year ended 31 December 2015 (c) Calculate the carrying amount of the building as at 31 December 2015 (d) Show all the related journal entries for the year ended 31 December 2015 (5) (5) (8)