The following data refers to assets in company XYZ, determine whether impairment has

	occurred or not and identify the amount to be recognized.				(10 marks)
		Carrying amount	Fair value less cost to sell	Value in use
	Item 1	119,000	121,000		114,000
	Item 2	237,000	207,000		205,000
	Item 3	115,000	117,000		123,000
	Item 4	83,000	75,000		79,000
	Item 5	31,000	26,000		-
b.	Explain the term capitalization of borrowing cost.				(5 marks)
c.	Identify under what circumstances can borrowing cost be recognized.				(5 marks)

2. Michael Adams Limited purchased new equipment and incurred the

following costs at the end of the first year of acquisition:

$

Purchase price 12 500 000

Routine servicing 25 000

Shipping and delivery 1 050 000

Non-Refundable taxes 200 000

Major replacement parts 500 000

Import duties 1 250 000

E Based on IAS 16 Property, Plant and Equipment, how much should Lebron James

recognise in his Statement of Financial Position, as the cost of the asset? (6 marks)

3. Hars Plc will be constructing a building costing $100M and it uses IAS 23 alternative treatment of borrowed funds. They took a loan of $80M specifically for this construction. The remainder will be taken from the general pool of funds. Their debt structure is as follows:

NCB Loan at 12% $30 000 000

Construction Loan at 8% $60 000 000

BNS Loan at 6% $80 000 000

A. What is the total borrowing cost to be capitalised? (8 marks)

B. Calculate the interest expense which will be recognised in the Statement of Comprehensive Income at the end of the financial year. (4 marks)