On the 1 April 2020 Glendon Limited acquired a loan of $200,000,0000 from First National Bank...

 

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On the 1 April 2020 Glendon Limited acquired a loan of $200,000,0000 from First National Bank (FNB) to construct a commercial office complex. The effective interest rate on the loan was 12% per annum. The company invested half of the loan funds on 1 May 2020 for six months at 9% interest. Construction cost of the property amounted to $300,000,000 excluding borrowing cost to be capitalised. The construction project was suspended during November 2020, but was completed on 31 December 2020. On 1 January 2021 the property was recorded on the books as a property plant and equipment as per IAS16. The useful life of the property was estimated at 50 years with a residual value of $2,000,000. However, on July 1, Glendon Limited decided to transfer 50% of the property to Investment property (IAS 40 fair value model) based on the carrying value at that date. On 31 December 2022 the investment property had a fair market wall of $280,000 REQUIRED: (a) Determine the total cost of the commercial office complex at 31 December 2020, including capitalised borrowing costs (7 marks) (b) Show the Extract of the Statement of Profit or Loss for the year ended 31 December 2021 (7 marks) (c) Show the Extract of the Statement of financial Position as at 31 December 2021 On the 1 April 2020 Glendon Limited acquired a loan of $200,000,0000 from First National Bank (FNB) to construct a commercial office complex. The effective interest rate on the loan was 12% per annum. The company invested half of the loan funds on 1 May 2020 for six months at 9% interest. Construction cost of the property amounted to $300,000,000 excluding borrowing cost to be capitalised. The construction project was suspended during November 2020, but was completed on 31 December 2020. On 1 January 2021 the property was recorded on the books as a property plant and equipment as per IAS16. The useful life of the property was estimated at 50 years with a residual value of $2,000,000. However, on July 1, Glendon Limited decided to transfer 50% of the property to Investment property (IAS 40 fair value model) based on the carrying value at that date. On 31 December 2022 the investment property had a fair market wall of $280,000 REQUIRED: (a) Determine the total cost of the commercial office complex at 31 December 2020, including capitalised borrowing costs (7 marks) (b) Show the Extract of the Statement of Profit or Loss for the year ended 31 December 2021 (7 marks) (c) Show the Extract of the Statement of financial Position as at 31 December 2021