X limited has a treasury department that arranges funds for all the requirements of the...
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X limited has a treasury department that arranges funds for all the requirements of the company including funds for working capital and expansion programs. During the year ended 31st March,2022,the company commenced the construction of a qualifying asset and incurred the following expenses: Date: 1July2021 Amount:250,000 Date:1Dec2021 Amount:300,000 The details of borrowings and interest thereon as under:(1) long term loan at 10% - Average balance : 1000,000 Interest :100,000 (2)Working capital loan - Avg balance :500,000 interest : 65000 (3)Total (of avg.bal) : 1,500,000(long term loan+working capital loan)(1000,000+500,000) (4)Total (of interest) : 1,65,000 i.e (100,000+65000) Calculate the borrowing costs the need to be capitalised.
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