Borrower Co has a policy of capitalizing interest costs on self-constructed assets in accordance with IAS 23 Borrowing Costs.

During the year it has the following sources of debt

	Average outstanding liability ($'000)	Interest cost ($'000)
medium-term bank debt	10,000	900
50 year term debt	25,000	2,000
Bank overdraft	5,000	600

All of the loans have been used to finance the production of qualifying assets, but none are related to a specific qualifying asset.

What is the appropriate capitalization rate to apply to qualifying asset?

Answer rating: 100% (QA)

The appropriate capitalization rate to apply to qualifying assets is ... View the full answer