alculate the cost of building b) Show the income statement (extract) for the years ended 31 December 2017 until 31st December 2020.
Salmah Bhd constructed a building on 1 Jan 2017. The building was completed on 31st December 2019. Construction cost (excluding interest) incurred on the building was RM 1,500,000.
+150 000
Salmah Bhd secured a loan of RM 1,000,000 from Sheila Finance Bhd to finance the construction costs at 10% interest rate per annum. Repayment period of loan was 5 years.
Since Salmah Bhd did not need the full amount of the loan in the 1st 5 year of the construction, it deposited RM 600,000 in fixed deposit which yielded an interest 8% per annum. The deposit matured on 31st December 2017.
The company policy is to capitalised borrowing costs as part of the cost of assets. The useful life of building was estimated to be 50 years.
You are required:
a) Calculate the cost of building
b) Show the income statement (extract) for the years ended 31 December
2017 until 31st December 2020.
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