Shark Tank plc used general funds to finance the construction of non-current assets. The general funds...

 

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Shark Tank plc used general funds to finance the construction of non-current assets. The general funds comprised the following: 9% £60,000 loan 8% £40,000 loan On 1 April 2019, SharkTank plc paid £20,000 to commence the production of a qualifying asset and a further £30,000 on 30 June 2019 to continue with the production. The asset was still being constructed at the end of the year. How much interest should be capitalised for this qualifying asset for the year ended 31 December 2019 (do not round up any your working - use the exact interest rate)? of Shark Tank plc used general funds to finance the construction of non-current assets. The general funds comprised the following: 9% £60,000 loan 8% £40,000 loan On 1 April 2019, SharkTank plc paid £20,000 to commence the production of a qualifying asset and a further £30,000 on 30 June 2019 to continue with the production. The asset was still being constructed at the end of the year. How much interest should be capitalised for this qualifying asset for the year ended 31 December 2019 (do not round up any your working - use the exact interest rate)? of Shark Tank plc used general funds to finance the construction of non-current assets. The general funds comprised the following: 9% £60,000 loan 8% £40,000 loan On 1 April 2019, SharkTank plc paid £20,000 to commence the production of a qualifying asset and a further £30,000 on 30 June 2019 to continue with the production. The asset was still being constructed at the end of the year. How much interest should be capitalised for this qualifying asset for the year ended 31 December 2019 (do not round up any your working - use the exact interest rate)? of Shark Tank plc used general funds to finance the construction of non-current assets. The general funds comprised the following: 9% £60,000 loan 8% £40,000 loan On 1 April 2019, SharkTank plc paid £20,000 to commence the production of a qualifying asset and a further £30,000 on 30 June 2019 to continue with the production. The asset was still being constructed at the end of the year. How much interest should be capitalised for this qualifying asset for the year ended 31 December 2019 (do not round up any your working - use the exact interest rate)? of

Answer rating: 100% (QA)

SOLUTION To calculate the interest that should be capitalized for the qualifying asset we need to determine the weighted average interest rate and the... View the full answer