Acruni Co. had the following loans in place at the beginning of 2019. 1 January 2019 GHC m 10% Bank loan repayable 2020 120 9.5% Bank loan repayable 2021 80 8.9% debenture repayable 2024 100 On 1 January 2019, Acruni Co began construction of a qualifying asset, a piece of machinery for a hydroelectric plant, using existing borrowings. Expenditure drawndown for the construction was GHc30 million on 1 January 2019, and GHc20million on 1 October 2019. Surplus funds were invested temporarily at a rate of 2%. Required a) Calculate the borrowing costs that can be capitalized for the piece of machinery. b) Compute the cost of the machinery that will be reported in the statement of financial position as at December ,2019
solve both a and b
Acruni Co. had the following loans in place at the beginning of 2019.
1 January
2019
GHC m
10% Bank loan repayable 2020 120
9.5% Bank loan repayable 2021 80
8.9% debenture repayable 2024 100
On 1 January 2019, Acruni Co began construction of a qualifying asset, a piece of machinery for a hydroelectric plant, using existing borrowings. Expenditure drawndown for the construction was GHc30 million on 1 January 2019, and GHc20million on 1 October 2019. Surplus funds were invested temporarily at a rate of 2%.
Required
a) Calculate the borrowing costs that can be capitalized for the piece of
machinery.
b) Compute the cost of the machinery that will be reported in the
of financial position
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