- This topic has 1 reply, 2 voices, and was last updated 10 years ago by
.
- Posts
A company arranged on 28 february, 2011 to borrow $20m funds at the rate of 6% to finance the development of a qualifying asset. Planning and architecture’s fees cost $500,000 and were paid out of general cash resources on 31 march 2011. work commenced on 3 April and the first tranche of money $6m was drawn down on 30 April 2011. Of this amount, $4m was spent immediately and the remaining $2m was invested at the rate of 4%pa until it was spent on 1 july together with $10m of the second and final tranche of $14m, the balance invested at 4%pa.
Work was halted on 31 august by industrial action and was not recommenced until 1 october. on 30 November, the investment was cashed in and the final $4m spent. the assest was completed on 1 February 2013.
how much borrowing cost must be capitalised ??
P.s I’ve tried a lot but unable to reach the answer $593,333
- You must be logged in to reply to this topic.