Suriaa Berhad has purchased a piece of land in Damansara on 1 February 2017. The purchased land has a vacant and unoccupied old building, that was demolished to make way for the new building. The new building will be used as Suriaa Berhads new headquarters, and construction had started in January 2019 and completed on 30 December 2020. Period of construction was halted from 1 April 2020 until 31 May 2020 due to the Restricted Movement Control Order (RMCO) by the Government.

The following costs were incurred:

Legal fees for obtaining legal title of the land	RM 40,000
Demolition of the vacant building	RM 80,000
Fees for architects in designing the new building	RM 30,000
Real property gains tax paid to LHDN	RM 6,000
Government soft loan obtained to construct the new building, 5% interest, payable in 10 years period	RM 1 million
Construction cost - 2019 - 2020	RM 1 million RM 1 million
Scrapped materials from old building disposed at scrap value	RM 4,000
Loan received from SME Bank for construction of asset, 9% interest payable in 10 years	RM 1 million

Required:

(a) Do you think the building meets the definition of qualifying asset as stated in MFRS 123? Justify your answer.

(3 marks)

(b) What does MFRS 123 state about interest on borrowings when constructing assets?

(2 marks)

(c) Determine the amount of interest on borrowings that are allowed to be capitalised as part of the cost of the new building for 2019 and 2020.

(5 marks)

(d) Show the relevant amounts to be disclosed in the Statement of Profit or Loss and the Statement of Financial Position at the end of the year 2019 and 2020.

(10 marks)