Leclerc Co has borrowed $2.4 million to finance the building of a factory. Construction is expected...

 

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Leclerc Co has borrowed $2.4 million to finance the building of a factory. Construction is expected to take two years. The loan was drawn down on 1 January 20X9 and work began on 1 March 20X9. $1 million of the loan was not utilised until 1 July 20X9 so Leclerc was able to invest it until needed. Leclerc Co is paying 8% on the loan and can invest surplus funds at 6%. Calculate the borrowing costs to be capitalised for the year ended 31 December 20X9 in respect of this project. Leclerc Co has borrowed $2.4 million to finance the building of a factory. Construction is expected to take two years. The loan was drawn down on 1 January 20X9 and work began on 1 March 20X9. $1 million of the loan was not utilised until 1 July 20X9 so Leclerc was able to invest it until needed. Leclerc Co is paying 8% on the loan and can invest surplus funds at 6%. Calculate the borrowing costs to be capitalised for the year ended 31 December 20X9 in respect of this project.

Answer rating: 100% (QA)

We have the following information Borrowed 24 million to finance the bu... View the full answer