Homework IAS 23 Borrowing Cost

Objective Question

1. D - because it took short period of time.

2. C
3. D – construction work commences.
4. A – start from the commencement date until the assets are substantially complete.

Zenzi.Co
Specific borrowing: mining equipment
8.9% X 150000000 X 6/12
=6675000
General Borrowing: Hydroelectric plant
1. Find the weighted average:

Interest Loan WA WA Rate

10.9% 120000000 (120m/200m) x 100 60% x 10.9%
= 60% =6.54%
9.5% 80000000 (80m/200m) x 100 40% x 9.5%
= 40% =3.8%

WA = 6.54% + 3.8%
= 10.34%
2. Find the borrowing cost (hydroelectric plant)

a) 1/1/20X8 – 30/9/20X8
10.34% x 30000000 x 9/12
= 2326500

b) 1/10/20X8-31/12/20X8
10.34% x 20000000 x 3/12
= 517000

Total borrowing cost to be capitalized

2326500+517000
=2843500