Question 2 (a) Awan Bhd constructed a building on 1 January 2021. The building was completed on 31 December 2021.Construction costs (excluding interest) incurred on the building was RM3 million. Awan Bhd secured a loan of RM2 million from Pelangi Financing Bhd on 1 January 2021 to finance the construction costs. Interest on the loan was charged at 5% per annum. Since Awan Bhd did not need the full amount for the loan in the first quarter of the construction, it deposited RM800,000 in a fixed deposit which yielded an interest of 2% per annum. Required: i. Compute fotal borrowing costs to be capitalized for construction of the building for financial year ended 31 December 2021.

Question 2 (a) Awan Bhd constructed a building on 1 January 2021. The building was completed on 31 December 2021.Construction costs (excluding interest) incurred on the building was RM3 million. Awan Bhd secured a loan of RM2 million from Pelangi Financing Bhd on 1 January 2021 to finance the construction costs. Interest on the loan was charged at 5% per annum. Since Awan Bhd did not need the full amount for the loan in the first quarter of the construction, it deposited RM800,000 in a fixed deposit which yielded an interest of 2% per annum. Required: i. Compute fotal borrowing costs to be capitalized for construction of the building for financial year ended 31 December 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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