Negril Enterprise commenced the construction of a plant on 1 January 2019 with funds borrowed from a
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Question:
Of the total overheads, two-thirds relate to cost overruns by the entity's management. The plant is to be depreciated over a period of fifty years on a straight line basis to a nil residual value. Construction of the plant was completed on September 30, 2019. However, the plant was brought into operation on October 1, 2019.
The plant is to be carried under the cost model in accordance with IAS 16.
Required:
a. Determine the capitalized cost of the plant as at October 1, 2019.
b. Prepare the statement of financial position extract as at December 31, 2019.
c. Prepare the statement of profit or loss for period ended December 31, 2019.
Explain how investment income earned from borrowed funds invested during construction of an asset should be accounted for
Related Book For
International Financial Reporting And Analysis
ISBN: 9781473766853
8th Edition
Authors: David Alexander, Ann Jorissen, Martin Hoogendoorn
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