Esinam ltd has borrowed GHS2.4m to finance the building of a factory. Construction is expected to take two years. The loan was taken on 1 January 2014 and work began on 1 March 2014. GHS1m of the loan was not utilised until 1 July 2014 so Esinam ltd was able to invest it until needed. Esinam ltd is paying concessionary interest of 8% per annum on the loan and invests surplus funds at 6% per annum. Calculate the borrowing costs capitalised for the year ended 31 December 2014 in respect of this project A. GHS130,000 B. GHS192,000 C. GHS100,000 D. GHS162,000
Esinam ltd has borrowed GHS2.4m to finance the building of a factory. Construction is expected to take two years. The loan was taken on 1 January 2014 and work began on 1 March 2014. GHS1m of the loan was not utilised until 1 July 2014 so Esinam ltd was able to invest it until needed. Esinam ltd is paying concessionary interest of 8% per annum on the loan and invests surplus funds at 6% per annum. Calculate the borrowing costs capitalised for the year ended 31 December 2014 in respect of this project A. GHS130,000 B. GHS192,000 C. GHS100,000 D. GHS162,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Esinam ltd has borrowed GHS2.4m to finance the building of a factory. Construction is expected to take two years. The loan was taken on 1 January 2014 and work began on 1 March 2014. GHS1m of the loan was not utilised until 1 July 2014 so Esinam ltd was able to invest it until needed. Esinam ltd is paying concessionary interest of 8% per annum on the loan and invests surplus funds at 6% per annum. Calculate the borrowing costs capitalised for the year ended 31 December 2014 in respect of this project
A. GHS130,000
B. GHS192,000
C. GHS100,000
D. GHS162,000
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