Asempa ltd. borrowed an amount of GHc 120,000 for the construction of a new headquarters...
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Accounting
Asempa ltd. borrowed an amount of GHc 120,000 for the construction of a new headquarters on January 1, 2019 at an interest rate of 11%. The money was spent on the project as follows:
January 1 GHc 40,000
July 1 GHc 65,000
November 1 GHc 15, 000
The construction was completed on December 31, 2020. However Asempa ltd invested surplus funds on temporary basis at a rate 4% during the accounting period before these funds were required for spending.
Required.
1) Compute the borrowing cost elegible for capitalization for the year ending December 31,2019
2) Compute the cost of the building to be reported in the statement of financial position as at 31.12.20
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