Grimtown took out a $10 million 6% loan on 1 January 20X1 to build a new...

 

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Grimtown took out a $10 million 6% loan on 1 January 20X1 to build a new football stadium. Not all of the funds were immediately required so $2 million was invested in 3% bonds until 30 June 20X1. Construction of the stadium began on 1 February 20X1 and was completed on 31 December 20X1. Calculate the amount of interest to be capitalised in respect of the football stadium as at 31 December 20X1 Grimtown took out a $10 million 6% loan on 1 January 20X1 to build a new football stadium. Not all of the funds were immediately required so $2 million was invested in 3% bonds until 30 June 20X1. Construction of the stadium began on 1 February 20X1 and was completed on 31 December 20X1. Calculate the amount of interest to be capitalised in respect of the football stadium as at 31 December 20X1

Answer rating: 100% (QA)

Interest should only be capitalized from 1 February 20X1 when the construction begins The total int... View the full answer