PRACTICE CLASS 5 - PPE + B.

COST + GOVERNMENT GRANT

ACQUISITION DATE OF ASSET -----> APRIL 1 2019 COST = 300 Million

50% OF THE COST IS FINANCED BY THE GOVERNMENT

REST OF THE 50% is to be Financed by the Company Rs. 150 million

APRIL 1 2019 ---> SPECIFIC LOAN Rs. 90 million

1. SPECIFIC LOAN ACQUIRED ON APRIL 1 2019

LOAN ACQUIRED = 90 Million x 14% x 9 / 12 = 9.45 B COST TOTAL FOR 9 MONTHS FTY 2019

2. SPECIFIC LOAN ACQUIRED ON DEC 1 2019

LOAN ACQUIRED = 30 Million x 15% x 1 / 12 = 0.375 B COST TOTAL FOR 1 MONTH FTY 2019

SURPLUS WORKING:

APRIL 1 2019 SURPLUS BAL 240.00

LESS: PAYMENT TO Plant Supplier (300.00)
APRIL 1 2019 DEFICIT GEN BORROWING (60.00) x 23.94% x 6 / 12 = (7.18) 6 Months Int from Apr - Sept 30
OCT 1 2019 Installation payment (30.00)
(90.00) x 23.94% x 1 / 12 = (1.80) 1 Month Int from Oct 1 - 30 Oct
NOV 1 2019 Installation payment (75.00)
(165.00) x 23.94% x 2 / 12 = (6.58) 2 Month Int from NOV 1 - 31 DEC
DEC 31 2019 Repayment from Govt grant 30.00
(135.00)

W.AVG RATE OF CAPITALIZATTION:

AVG INTEREST
OUT BAL INT EXP
BANK P 250.00 25% 62.50
BANK Z 280.00 23% 64.40
530.00 126.90 23.94% W.AVG RATE OF CAPITALIZATION

Apr-19 CASH 150.00

Deferred Govt Grant 150

Apr-19 CASH 90.00

Bank Specific loan @14% 90

Apr-19 PPE - CWIP 240.00

CASH 240.00

Apr-19 Cash 60.00

General Borrowing 60.00

Apr-19 PPE - CWIP 60.00

CASH 60.00

Oct-19 Cash 30.00

General Borrowing 30.00

PPE - CWIP 30.00

CASH 30.00

Nov-19 Cash 75.00

General Borrowing 75.00 165.00

Nov-19 PPE - CWIP 75.00

CASH 75.00
1st DEC 2019 Cash 30.00
Specific Loan @ 15% 30.00

PPE - CWIP 30.00

Cash 30.00

31st DEC 2019 Cash 30.00

Deferred Govt Grant 30.00

General Borrowing 30.00

Cash 30.00

CWIP - PPE AMOUNT

TOTAL COST OF PURCHASE 300.00

ADD: Installation cost
OCT 1 2019 30.00
NOV 1 2019 75.00
DEC 1 2019 30.00
135.00 TOTAL COST OF PURCHASE AND INSTALLATION COST
ADD: Borrowing cost
- SPECIFIC BORROWING 1 3.15 9.45 / 9 x 3 OCT 1 - DEC 31 2019
- SPECIFIC BORROWING 2 0.375 MONTH OF DEC
- General Borrowing 8.38
11.90519 BCOST TO BE CAPITALIZED DURING 2019
TOTAL CWIP in 2019 446.91

AS AT 31 DEC 2019 STATEMENT OF PROFIT OR LOSS

NON-CURRENT ASSET
PROPERTY PLANT AND EQUIPMENT - CWIP 446.91
INTEREST EXPENSE FOR THE YEAR 125.19
(126.90 - 8.38) + (9.45 + 0.375 -3.15)
NON-CURRENT LIABILITIES
SPECIFIC LOAN 1 90.00
SPECIFIC LOAN 2 30.00
BANK P 230.00
BANK Z 260.00
Deferred Government Grant 180.00

CURRENT LIABILITIES
Interest payable 136.73
126.90 + 9.45 + 0.375

W.AVG RATE OF CAPITALIZATTION FOR 2020

AVG INTERES
OUT BAL INT T EXP
BANK P 390.00 25% 97.50
BANK Z 230.00 24% 55.20
620.00 152.70 24.63% W.AVG RATE OF CAPITALIZATION
WORKING FOR 2020

Balance of general borrowing as at Jan 1 2020 (135.00) x 24.63% x 3 / 12 = (8.31) 3 months Jan - March 2020
April 1 2020 - payment to contractor (80.00)
(215.00) x 24.63% x 1 / 12 = (4.41) 1 Month April 1 - 30 Apr 2020
May 1 2020 - Repayment of loan from Righ proceeds 25.00
(190.00) x 24.63% x 3 / 12 = (11.70) 3 months MAY - JULY 31 2020
Aug 1 2020 - payment to contractor (30.00)
(220.00) x 24.63% x 1 / 12 = (4.52) 1 Month Aug 1 - 31 aug
1. SPECIFIC LOAN ACQUIRED ON APRIL 1 2019

LOAN ACQUIRED = 90 Million x 14% x 12 / 12 = 12.6 B COST TOTAL FOR 8 MONTHS IN 2020 to be capitalized
2. SPECIFIC LOAN ACQUIRED ON DEC 1 2019

LOAN ACQUIRED = 30 Million x 15% x 1 / 12 = 4.5 B COST TOTAL FOR 8 MONTHS IN 2020 to be capitalized

ENTRIES FOR THE YEAR 2020

Apr-20 Cash 80.00

Gen borrowing 80.00

Apr-20 PPE - CWIP 80.00

Cash 80.00

MAY 1 2020 Cash 25.00

Share capital + PREMIUM 25.00

MAY 1 2020 Gen borrowing 25.00

Cash 25.00

PPE - COST WORKING:

Opening CWIP as at jan 1 2020 446.91

Add:
Payment to contractor on Apr 1 80.00
Payment to contractor on Aug 1 30.00
110.00
Add: Interest to capitalized
General Borrowing 28.94
Specific Borrowing
Loan 1 8.40
Loan 2 3.00
Total B.cost to be capitalized FTY 2020 40.34
Total cost of asset 597.24
Depreciation for the year 2020 (13.27)
583.97 ---> TO TAKEN INTO BALANCE SHEET

AS AT 31 DEC 2020 PROFIT AND LOSS EXTRACTS:

Non-current Assets
Property plant and equipment 583.97 Interest expense (129.46)
(152.70 - 28.94) + ( 12.6 + 4.5 - 8.4 - 3 )

Non - Current Liabilities Deferred grant income 4.00

Loan 1 - Specific 90.00
Loan 2 - Specific 30.00 Depreciation expense (13.27)
BANK P 320.00
BANK Z 210.00
Defferred Govt Grant 164.00

Current Liabilities
Interest payable 306.53 OP 136.73 + 152.70 + 12.6 + 4.5
Defferred Govt Grant 12.00

Deferred Govt Grant 180.00

Transferred to P&L DGI (4.00)
Balance sheet 176.00 ---> to be appeared in balance sheet
Current portion (12.00)
164.00