Required a. Calculate the total borrowing cost to be capitalized? b. Calculate the interest expense which will be recognized in the Statement of Comprehensive Income at the end of the financial year.
Required a. Calculate the total borrowing cost to be capitalized? b. Calculate the interest expense which will be recognized in the Statement of Comprehensive Income at the end of the financial year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
JDIP will be constructing a bridge costing $70m and it uses IAS 23
alternative treatment of borrowed funds. JDIP took a loan of $50M
specifically for this construction. The remainder will be taken from the
general pool of funds.
Debt structure of the JDIP is as follows:
* CDB Loan at 8% $25 000 000
* Construction Loan at 6% $50 000 000
* IDB Loan at 5% $75 000 000
Required
a. Calculate the total borrowing cost to be capitalized?
b. Calculate the interest expense which will be recognized in the
Statement of Comprehensive Income at the end of the financial year.
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