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May 21, 2020 at 9:19 pm
Hi… sir what about the 1 month of june… why didn’t we capitalise that too?
April 15, 2020 at 9:22 am
April 10, 2020 at 7:35 pm
Goodpm, I believe the correct answer to the above question is $5.915m or $5,915,000
April 9, 2019 at 7:18 pm
correct me if I am wrong the remaining non-capitalised interest of 1.61m (2.2-0.59) will be shown in the income statement as an expense?
May 20, 2019 at 2:22 pm
Yes, correct. Anything not capitalised is expensed through profit or loss.
January 16, 2019 at 9:52 pm
Hi Why did you take full one year interest on the month of January , on $10 million?
October 23, 2018 at 7:03 pm
Hello. I just want to clarify that part of the question saying that they used $10m as expenditure on 1 jan and then for 1 july they used $15m as expenditure. Are these separate expenditures? that means they’re also separate loans issued by Venezuela? bcoz you applied the interest rate for the $10m for the WHOLE YEAR while HALF OF THE YEAR for the $15m. I just got confused bcoz what I did before seeing your solution was I time apportioned the $10m interest for 6 months as well, believing that that fund was just for jan-june only and then the rest will be for the $15m. I hope you will clarify this thank you
December 31, 2018 at 1:13 pm
Yes, they are two separate amounts that have been spent and therefore capitalised from those dates. The $10 million will have been for the full 12 months, whilst the additional $15 million will be for the final 6 months of the year.
January 16, 2019 at 9:53 pm
But it doesn’t say anywhere in question clearly that they spent $10 million for full one year?
October 17, 2019 at 9:52 am
I know this question can read in different ways however you have to look at it from the point of view that it is a qualifying asset over a “PERIOD OF CONSTRUCTION” therefore if no end date for construction is given than you need to capitalised over the remaining month(s).
hope this helps
October 9, 2018 at 4:58 pm
Is the answer to this example correct? Your answer is $0.59m. This is broken down to ($10m x 3.38%) + ($15m x 3.38% x 6/12). $10m x 3.38% is equal to $0.38m. $15m x 3.38% x 6/12 is equal to $0.285m; giving $0.665m.Am I going wrong somewhere?
October 23, 2018 at 7:10 pm
$10m x 3.38% = $338,000 + $15m × 3.38% = $507,000 × 6/12 = $253,500
$338,000 + $253,500 = $591,500 or $0.59m
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