QUESTION 2 25 Marks Part a Sandra has been appointed as the accountant of Sisera Ltd. The company is currently in the process of constructing a new plant for the production of a new product known as Jos Panda. The board of directors became aware of IAS 23 and approached Sandra for advice. Sandra obtained the following information: The board of directors appointed a committee to research the project. The committee estimated that it would take twenty months to complete the plant. Construction on the plant commenced on 12 June 2019 Expenditure associated with the project has already been capitalized to the cost of the plant No borrowing costs have been capitalized to date The project has been/will be financed as follows: Use of a general overdraft facility at an interest rate of 24% per annum until 31 October 2019. The issue of debentures on 1 November 2019 at an interest rate of 12% per annum, redeemable at a premium of 5%. These debentures will be issued specifically to finance the project The company's reporting date is 31 October 2019. Required: Advise Sandra and the board of directors on the following: 2.1 Whether the interest paid on the overdraft facility for the period 12 June 8 2019 to 31 October 2019 may be capitalized to the plant. Whether the interest paid on the debentures as well as the premium on future 5 redemption can be capitalized to the plant. Total 13