QUESTION 3 (IAS 23) A limited is currently constructing a qualifying asset. The project commenced on 1 (25 Marks) Expenses incurred up to December 2016 amounted to NS 2 500 000 and the borrowing costs already capitalised to the asset at 31 December 2016 amounted to NS 90 000. The following information is provided to you July 2016. Total financing available Debentures at 12% per annum (obtained 30 June 2016 Bank overdraft at 14% per annum obtained on 1 January 2017 General loan at 16% per annum obtained on 15 August 2017 Contract costs incurred over the following periods 1 January 2017 to 31 March 2017 NS 5 000 000 2 000 000 1500 000 April 2017 to 30 June 201 1 July 2017 to 30 September 2017 1 October 2017 to 15 December 2017 1 000 000 200 000 1800 000 1 400 000 The interest rate on the bank overdraft changed on 1 April 2017 from 14% to 15% per annum. None of the above financing arrangements are specific to the construction of the qualifying asset. The construction of the building was completed on 15 December 2017 Borrowing costs are capitalised quarterly Required: Calculate the amount of borrowing costs that must be capitalised to the asset, and the carrying amount of the asset in terms of IAS 23 Borrowing costs for the year ended 31 December, 2017 assuming that (a) The expenses were incurred and paid for evenly over each period (b) The expenses were incurred and paid for at the beginning of each period, and (c) The expenses were incurred and paid for at the end of each period