On 1 January 2016, Carkey Copy Bhd had managed to accumulate finances amountinge RM200 million to...

 

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On 1 January 2016, Carkey Copy Bhd had managed to accumulate finances amountinge RM200 million to finance their plant in Senawang, and its general administrative operation The following are the details on the outstanding borrowings and their corresponding costs the year ended 31 December 2016: Amount borrowed Rate of interest Interest cos RM'000 RM'000 Term loan 50,000 10 5,000 Loan stock 110,000 12 13,200 Rodeemable preference shares 40,000 6. 2,400 Total 200,000 During 2016, the company had utilised RM50 million of the borrowed funds to develop the plant. The construction of the plant commenced on 1 January 2016, and completed on 30 June 2017. In line with MFRS 123 Borrowing casts, all borrowing costs on qualifying assets were to be capitalised. Required: (a) Define "qualifying assets' in accordance with MFRS 123 Borrowing Costs AND state whether the manufacturing plant of Carkey Bhd. is a qualifying asset. (2 marks) Compute the capitalisation rate AND the amount of borrowing costs that qualify for the capitalisation for the financial year 2016 and 2017. (b) (5 marks) Advise the management of Carkey Bhd on how to record the borrowing costs associated with the construction of the company's manufacturing plant, in accordance with MFRS 123 Borrowing Costs. (c) (3 marks) Show the amount of borrowing costs that would be charged as an 'expense" in the company's statement of comprehcnsive income for the year ended 31 December 2016 (2 marks) (d) (e) Carkey Bhd had invested any surplus from the loan funds that were yet to be utilised in odher investments. The interests income earned from the temporary investments of the torm loan funds were as follows On 1 January 2016, Carkey Copy Bhd had managed to accumulate finances amountinge RM200 million to finance their plant in Senawang, and its general administrative operation The following are the details on the outstanding borrowings and their corresponding costs the year ended 31 December 2016: Amount borrowed Rate of interest Interest cos RM'000 RM'000 Term loan 50,000 10 5,000 Loan stock 110,000 12 13,200 Rodeemable preference shares 40,000 6. 2,400 Total 200,000 During 2016, the company had utilised RM50 million of the borrowed funds to develop the plant. The construction of the plant commenced on 1 January 2016, and completed on 30 June 2017. In line with MFRS 123 Borrowing casts, all borrowing costs on qualifying assets were to be capitalised. Required: (a) Define "qualifying assets' in accordance with MFRS 123 Borrowing Costs AND state whether the manufacturing plant of Carkey Bhd. is a qualifying asset. (2 marks) Compute the capitalisation rate AND the amount of borrowing costs that qualify for the capitalisation for the financial year 2016 and 2017. (b) (5 marks) Advise the management of Carkey Bhd on how to record the borrowing costs associated with the construction of the company's manufacturing plant, in accordance with MFRS 123 Borrowing Costs. (c) (3 marks) Show the amount of borrowing costs that would be charged as an 'expense" in the company's statement of comprehcnsive income for the year ended 31 December 2016 (2 marks) (d) (e) Carkey Bhd had invested any surplus from the loan funds that were yet to be utilised in odher investments. The interests income earned from the temporary investments of the torm loan funds were as follows

Answer rating: 100% (QA)

01 Calculation of Capitalisation rate Total Borrowings RM 000 Weighted Average Rate of Interest W... View the full answer