QUESTION 4 King Konstruction Ltd will construct an oil rig during its current financial year ended 30 June 2023. To construct the oil rig, King Konstruction Ltd will need more loans in addition to the existing finance facilities already obtained by the entity The construction began on 1 July 2022 and was completed on 30 June 2023. The Financial Manager at King Konstruction Ltd requires your assistance to determine the amount of borrowing costs that can be capitalized to the cost of the oil rig plant Details regarding certain payments relating to the construction of the oil rig Description Date of payment Amount of payment 1 July 2022 R4 000 000 1 January 2023 R3 000 000 Payment to a contractor Payment to a supplier Payment to a contractor Total 1 March 2023 R5 000 000 R12 000 000 A specific loan for the R12 000 000 was negotiated with Green Bank and obtained on 1 July 2022 at a rate of 8.5% per annum. Any surplus funds regarding the specific loan were reinvested at another bank, Blue Bank at 7.2% per annum. King Konstruction Ltd also had general borrowings as follows: General borrowings outstanding on 1 July 2022 R8 000 000 Name of financial institution Loan with Yellow Bank Overdraft at Red Bank 67 R2 500 000 General borrowings outstanding on 23 June 2023 REQUIRED: R9 000 000 R5 000 000 ANNEXURE F: FORMATIVE ASSESSMENT 1 (28 marks) Average general borrowings outstanding for the 2023 financial year. RB 500 000 R3 750 000 4.1 Only the specific loan 4.2 Only the existing general loans During March 2023, heavy winter rains resulted in the construction being halted for the entire month. Interest incurred R420 000 Ignore all taxation. Round of rates and monetary amounts to two decimal places. R450 000 HFAC334-1-Jul-Dec 2023-FA1-SK-V4-13072023 Assist the Financial Manager of King Konstruction Ltd to calculate the amount of net borrowing costs that should be capitalised in terms of IAS 23 to the cost of the oil rig plant where costs relating to the construction were paid for using the following: (14 marks) (14 marks)

QUESTION 4 (28 marks) Kang Konstruction Lid wil consthut an ol ing during its cument finandil year ended 30 June 2023 . To construct the al ro. King Konstrudion Lid wel need mare lains in addion to the existing france tacibes aready obtained by the ertiy the construction began on 1 July 2002 and was completed on 30 Jure 2023 . The Financid borrowrig costs that can be captalized to the cost of the al ing plant Detals regarding cortain paymerts relasing to the conetuction of the ci ng A spechic ban for the R12 000000 was regotaled weth Green Bank and cotaned en 1 July 2022 at a rate of 5 X per annum. Any surplus funds regarding the specific ban were reinvesied of another bank. Blue Bank at 7.2% per amum. King Konstruction Ltd atso had penera borroungs as follows. Duting March 2023, heavy winter rairs resulad in the comiruction being habed forthe entre morith a) REQUIRED: Assist the Financial Manager of King Konstruction Lid to cakuabe the amourt of net borrowing costs that ahoust be captaised in verme of US 23 bo the cost of the of rio piant where costs relating to the consevidion were paid for uning the blowing 41 Ory the speciciom (14 mans) 42 Onty the existing gernera bane (14mans) Gnore at taxation Round of rales and monetiry amourta is tuo dechul places QUESTION 4 (28 marks) Kang Konstruction Lid wil consthut an ol ing during its cument finandil year ended 30 June 2023 . To construct the al ro. King Konstrudion Lid wel need mare lains in addion to the existing france tacibes aready obtained by the ertiy the construction began on 1 July 2002 and was completed on 30 Jure 2023 . The Financid borrowrig costs that can be captalized to the cost of the al ing plant Detals regarding cortain paymerts relasing to the conetuction of the ci ng A spechic ban for the R12 000000 was regotaled weth Green Bank and cotaned en 1 July 2022 at a rate of 5 X per annum. Any surplus funds regarding the specific ban were reinvesied of another bank. Blue Bank at 7.2% per amum. King Konstruction Ltd atso had penera borroungs as follows. Duting March 2023, heavy winter rairs resulad in the comiruction being habed forthe entre morith a) REQUIRED: Assist the Financial Manager of King Konstruction Lid to cakuabe the amourt of net borrowing costs that ahoust be captaised in verme of US 23 bo the cost of the of rio piant where costs relating to the consevidion were paid for uning the blowing 41 Ory the speciciom (14 mans) 42 Onty the existing gernera bane (14mans) Gnore at taxation Round of rales and monetiry amourta is tuo dechul places