Y Ltd. issued at the start of year 1, 10% (interest paid annually and having maturity...

 

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Y Ltd. issued at the start of year 1, 10% (interest paid annually and having maturity period of 4 years) bonds with a face value of 2,00,000 at a discount of 10% to finance a qualifying asset which is ready for intended use at the end of year 2. Compute the amount of borrowing costs to be capitalized if the company amortizes discount using Effective Interest Rate method by applying 13.39% p.a. of EIR. Y Ltd. issued at the start of year 1, 10% (interest paid annually and having maturity period of 4 years) bonds with a face value of 2,00,000 at a discount of 10% to finance a qualifying asset which is ready for intended use at the end of year 2. Compute the amount of borrowing costs to be capitalized if the company amortizes discount using Effective Interest Rate method by applying 13.39% p.a. of EIR.

Answer rating: 100% (QA)

SOLUTION Y Ltd issued bonds with a face value of Rs 200000 Interest rate on bonds is 10 pa paid annu... View the full answer