Question: Tweapia Limited acquired a loan of GHC 100,000 loan for the construction of a new office space. The company begun the construction of an item

Tweapia Limited acquired a loan of GHC 100,000 loan for the construction of a new office space. The company begun the construction of an item of property, plant and equipment on 1 march 2020. Due to a strike action against the firm from 1 April 2020 to 30 June 2020, there was no construction activity going on. The building was completed at the end of December 2021. The loan was acquired under the following terms:

GHC 35,000 from GCB Bank at 8%

GHC 45,000 from CBG Bank at 10%

GHC 20,000 from NIB Bank at 14%

The budgeted cost of the construction was 85,000 and the remaining amount of funds was used as working capital.

Required:

Account for the above transactions in accordance with IAS 23 – Borrowing Cost. Show the income statement and statement of financial position extracts as at 31 December 2021

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