Loan interest and investment surplus question from BPP Kit

Borrowing costs are not capitalisable until work commences. The interest incurred during the 2 months before work commenced must therefore be expensed I'm surprised by their interest received calculation! I would have thought that it should be for 1 March through 30 June ie 4 months. Impossible in an exam question to give precise dates of every amount spend - it's not like in real life. When an amount is drawn down and some is invested, the presumption is that the amount spent is all spent on the day it is drawn down. Unrealistic? Yes, of course! I think the answer should be $160,000 less $1m * 6% * 4/12 = $200,000 A total of $140,000!

That's the only thing I can put it down to. A borrowing cost question was asked maybe 2 exams ago and specifically the examiner said that the interest income could only be taken to reduce the capitalized cost for the same period that the interest paid was capitalised Ok?

You're welcome