Question 3 (a) Dynasty Bhd commenced the construction a new factory on 1 April 2019. Dynasty Bhd secured two loans: 8% Bank loan of 100 million and 10% Bank loan of 60 million. Dynasty Bhd used 30 million of the existing loan on 1 April 2019 and 45 million was used in 1 August 2019. Required: Calculate the interest to be capitalized at the end of the financial year. (5 marks) Question 3 (b) (1) Borrowing costs are interests and other costs incurred on funds borrowed. Discuss the rules relating to commencement and cessation of capitalization of borrowing costs on qualifying assets according to IAS 23. (5 marks) (ii) The cost of inventory for bags is RM 14,000 and it is expected to be sold at RM18,000, however, part of the bag was damage and the cost of inventory declined by RM8,000 in the middle of the year. Mr Tan appointed Quest Sdn Bhd to sell the inventories for a commission of RM 1,500. At the end of the financial year, the bags had not been sold. Required: Determine the net realizable value of the bag and cost of inventory at the end of the financial year. (5 marks) (iii) Zahid Enterprise is producing batik in Kuala Lumpur. The material is imported from India because the quality is good and the price is affordable. During the purchase of the silk material, the following expenses are incurred. Required: As an accountant to Zahid Enterprise you are instructed to identify whether the following expenses can be part of the cost of purchase of the silk material. (a) Cost of purchase of silk material from India at RM40,000. A piece of the silk material was damaged, estimated at RM450. (b) Non-refundable tax of RM1,500 (c) Transportation cost incurred from India to Malaysia at RM2,500. (d) Expected selling cost of batik at RM700. (e) Open storage cost of RM350 (5 marks) (Total: 20 marks)