[khrhnm]

Sir, regarding this same question:

“Alpha took out a loan for $3,600,000 on 1 February 20X1 to finance the construction cost of its new offices. Interest was paid at 5% throughout the year.

The initial batch of materials were purchased and delivered on 1 March 20X1 and construction began on that day. Construction and decoration was completed on 1 November 20X1, although the offices were not occupied until 1 December 20X1.
Bank interest of $15,000 was earned on investment of the proceeds of the loan before it was all spent.

What is the amount of borrowing costs that should be capitalised in accordance with IAS 23 for the year ended 31 December 20X1 (performing interest calculations to the nearest month)?”

I have calculated the borrowing cost as $3,600,000 x 5% x 8/12 months = $120,000. I am uncertain about the time apportionment for the investment income, which I have calculated as $15,000 x 8/9 months = $13,333. The borrowing cost to be capitalised that I got is $120,000 – $13,333 = $106,667. Is this correct?

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