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Dear Sir,
I would like to ask about the borrowing costs.Regards to the general borrowings, we need to calculate the weighted average expenditures and then multiply with capitalization rate to give out the capitalized borrowing costs.
So whether the expenditure based on the actual payment or the expenses incurred?
For example, during the year, USD 1,000 of expenses are incurred and recorded: Dr Asset/ Cr Liabilities but only 200 USD is pad: Dr Libilities 200/ Cr Cash 200.
So the amount to calculate the weighted average expenditure will be USD 1,000 or USD 200?
Thank you so much and look forward to hearing from youOn what amount is the interest / borrowing cost being calculated?
Calculate the interest for the period based on the amount borrowed and then allocate that calculated amount on the basis of, probably, amounts paid or expenses incurred (or stage reached or whatever is given in the question as the indicator for that allocation)
Ok?
Dear sir,
please how do i go about this
Question
Alpha took a loan for $3600,000 on 1 february 2001 to finance the construction cost of its new offices. interest paid was at 5%throughout the year.
the initial batch of materials were purchased and and delivered at 1 march 2001 and construction began on that day.
construction and decoration was completed on 1 nov 2001, although the offices were not occupied until 1 Dec 2001
bank interest of $15000 was earned on investment of the proceeds of the loan before it was all spent.
what is the amount of borrowing cost that should be capitalised in accordance with IAS 23 for the year ended 31st dec 2001?The appropriate time period is from 1 March to 31 October = 8 months
So 5% x $3,600,000 for 8 months = ?????
Deduct the amount of interest earned … probably time apportioned to exclude the interest earned during the month of February
And that should give you the answer!
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?
Hello, need help on this question
Which of the following would be qualify as a borrowing cost as defined in IAS 23 Borrowing costs?
1) Premium on redemption of preference share capital
2) Discount in the issue of convertible debt
3) Interest expense calculated using the effective interest rate
4) Finance charges related to finance leaseA. 1, 2 and 3 only
B. 2, 3 and 4 only
C. 1 and 4 only
D. All four
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