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I have borrowed 2.4 million to fiancé construction. the loan was drawn down on may 1, 2014 and construction work commenced on may 30,2014. 1million of funds was not required until November 1 2014
borrowing cost rate is 8% & invested rate is 6%
how much borrowing cost to be capitalized
how should I worked out the invested amount
I have seen 2 question where one they have used the drawn down on may 1, 2014 and the other commenced on may 30,2014
which one should be usedBorrowing costs to be capitalised are those that are incurred whilst construction of your boyfriend (fiancé????) is in progress
In the example that you have written, construction of your betrothed only commenced on 30 May so borrowing costs on $2.4m commence with effect from the end of May
“how should I worked out the invested amount”
If you borrow $2.4m at the start of May and you don’t need $1m until the end of October … how much do you imagine was invested? What would YOU do with $1m surplus funds that were not necessary for another 6 months?
OK?
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