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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On March 1, 2023, Cake Company began construction of a low-rise building for their own use. The construction was completed on October 31, 2023. It is the company's policy to capitalize interest cost as provided in IAS 23, Borrowing Costs. The company had the following outstanding debts during the year 2023: • 12%, 3-year note dated March 1, 2023. This loan relates specifically to the building project. - P10,000,000 9%, 5-year note dated July 16, 2022- P5,000,000 Expenditures on the project during 2023 were as follows: March 1-P6,700,000 July 10-7,800,000 September 1-6,250,000 What is the total cost of the self-constructed building?
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