7. ABC Plc took a loan of 20% GHS1, 000,000 from GBK Bank on 1 January 2017 to build an office block. The contactor agreed to the following payment schedule:

			GHS
·	1st	January 2017	300,000
·	1st	April 2017	200,000
·	30th September 2017		400,000
·	31st December 2017		100,000

ABC would invest the idle borrowed funds in a government Treasury Bill at a rate of 15% per annum. . Interest earned would not be re-invested.

It was agreed that the contractor would complete the house and deliver it to ABC on 31 December 2017.

ABC would make one-off payment of the GHS1, 000,000 to the Bank (together with the accrued annual interest) on 1 January 2018.

At what amount would ABC recognize the building initially in line with IAS 23 ‘Borrowing Costs’

Answer rating: 100% (QA)

According to IAS 23 Borrowing Costs borrowing costs that are directly attributable to the acquisitio... View the full answer