QUESTION 3 [26marks] PART(A) Flagrant Limited purchased equipment for $600,000. The company received a government grant to cover 40% of the cost. The useful life of the asset is 4 years with nil residual value. Using both the Deferred Income Approach and Deduction from Assets method, show the extracts of the: (i) Statement of Comprehensive Income for 3 years (ii) The Statement of Financial Position for 3 years PART (B) (6 marks) (6 marks) a) According to IAS 23, Borrowing Costs, certain borrowing costs have to be capitalized. Explain with reference to the above IAS how investment income may be applied to borrowing cost to be capitalized. (4 marks) b) Bogue Construction Limited acquired a loan for $24 million on 1 January 2019 to begin the construction of a bridge. The loan was acquired from National Savings Bank at an effective interest rate of 14%. Construction did not begin on the bridge until, 1 April 2019 and was completed and ready for use on 30 November 2019. The company invested $8m of the funds received from the bank over the period 1 January to 30 June 2019 at an interest rate of 9%. During the month of August 2019 construction on the project was suspended. REQUIRED: For the year ended 31 December 2019 show the following: 1. The Statement of Comprehensive Income Extract for the year (4 marks) 2. The Borrowing cost to be capitalized on the Statement of Financial Position (6 marks)