Leclerc has borrowed $2.4 million to finance the building of a factory. Construction is expected to take two years. The loan was drawn down and incurred on 1 January 20X9 and work began on 1 March 20X9. $1 million of the loan was not utilised until 1 July 20X9 so Leclerc was able to invest it until needed. Leclerc is paying 8% on the loan and can invest surplus funds at 6%. Calculate the borrowing costs to be capitalised for the year ended 31 December 20X9 in respect of this project. A $130,000 B $192,000 C $100,000 D $162,000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Leclerc has borrowed $2.4 million to finance the building of a factory. Construction is expected to take

two years. The loan was drawn down and incurred on 1 January 20X9 and work began on

1 March 20X9. $1 million of the loan was not utilised until 1 July 20X9 so Leclerc was able to invest it

until needed.

Leclerc is paying 8% on the loan and can invest surplus funds at 6%.

Calculate the borrowing costs to be capitalised for the year ended 31 December 20X9 in respect of this

project.

A $130,000

B $192,000

C $100,000

D $162,000

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