Required:

a)Ignoring compound interest, calculate the borrowing costs which may be capitalized for each of the assets and consequently the cost of each asset as at 31 December 20X8.

b)Prepare the journal entries in respect of the borrowing costs capitalization.

Question - IAS 23 Borrowing Costs On 1 January 20X8 Allan Lee Co. borrowed $20 million to finance the production of two assets, both of which were expected to take a year to build. Production started at the beginning of 20X8. ~ The loan facility was drawn down on 1 January 20X8, and was utilised as follows, with the remaining funds invested temporarily: