Foreign Currency Loan – NBC Institute

CR – May 2020 – L3 – Q2b – Capitalization of Borrowing Costs

Question

Dompoase Ltd incurred the following borrowing costs during the financial year 2018:

GH¢’000
Overdraft interest	12
Foreign currency loan interest (correctly translated into GH¢)	84
Foreign currency loan exchange differences on capital	140

In addition, a three-year fixed-rate GH¢2 million loan was taken out on 1 January 2018 at 6.5%. A loan set-up fee was charged at GH¢20,000. This increased the effective interest rate on the loan to 6.88%.

Required:
Determine the maximum amount that could potentially be capitalized as borrowing costs during the period (assuming an asset was being financed using all available finance).

Answer

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Tags: Borrowing Costs, Capitalization, Foreign Currency Loan, Interest, Overdraft
Level: Level 3

Series: MAY 2020

FR – Nov 2023 – L2 – Q2a – Financial Reporting Standards and Their Applications

Calculate the maximum amount of borrowing costs that could potentially be capitalised in accordance with IAS 23 for Banda Ltd.

Question

Banda Ltd (Banda) incurred the following borrowing costs during the financial year-end 31 December 2022:

GH¢
Overdraft interest
Foreign currency loan interest (correctly translated into GH¢)
Foreign currency exchange differences on equity
In addition, a three-year fixed rate GH¢2.4 million loan was borrowed on 1 January 2022 at 6.5%. A loan set-up fee (transaction costs) of GH¢24,000 was incurred. This increased the effective interest rate on the loan to 6.88%.

Required:
In accordance with IAS 23: Borrowing Costs, calculate the maximum amount that could potentially be capitalised as borrowing costs for the year-end 31 December 2022 (assuming an asset was being financed using all available finance).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Borrowing Costs, Capitalisation, Foreign Currency Loan, IAS 23, Interest expense

Topic: Borrowing Costs, Financial Reporting Standards and Their Applications
Series: NOV 2023

CR – May 2020 – L3 – Q2b – Capitalization of Borrowing Costs

Question

Dompoase Ltd incurred the following borrowing costs during the financial year 2018:

GH¢’000
Overdraft interest	12
Foreign currency loan interest (correctly translated into GH¢)	84
Foreign currency loan exchange differences on capital	140

Required:
Determine the maximum amount that could potentially be capitalized as borrowing costs during the period (assuming an asset was being financed using all available finance).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Borrowing Costs, Capitalization, Foreign Currency Loan, Interest, Overdraft
Level: Level 3

Series: MAY 2020

FR – Nov 2023 – L2 – Q2a – Financial Reporting Standards and Their Applications

Calculate the maximum amount of borrowing costs that could potentially be capitalised in accordance with IAS 23 for Banda Ltd.

Question

Banda Ltd (Banda) incurred the following borrowing costs during the financial year-end 31 December 2022:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Borrowing Costs, Capitalisation, Foreign Currency Loan, IAS 23, Interest expense

Topic: Borrowing Costs, Financial Reporting Standards and Their Applications
Series: NOV 2023

Question Tag: Foreign Currency Loan

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CR – May 2020 – L3 – Q2b – Capitalization of Borrowing Costs

Required:
Determine the maximum amount that could potentially be capitalized as borrowing costs during the period (assuming an asset was being financed using all available finance).

FR – Nov 2023 – L2 – Q2a – Financial Reporting Standards and Their Applications

Calculate the maximum amount of borrowing costs that could potentially be capitalised in accordance with IAS 23 for Banda Ltd.

CR – May 2020 – L3 – Q2b – Capitalization of Borrowing Costs

Required:
Determine the maximum amount that could potentially be capitalized as borrowing costs during the period (assuming an asset was being financed using all available finance).

FR – Nov 2023 – L2 – Q2a – Financial Reporting Standards and Their Applications

Calculate the maximum amount of borrowing costs that could potentially be capitalised in accordance with IAS 23 for Banda Ltd.

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Question Tag: Foreign Currency Loan

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CR – May 2020 – L3 – Q2b – Capitalization of Borrowing Costs

Required: Determine the maximum amount that could potentially be capitalized as borrowing costs during the period (assuming an asset was being financed using all available finance).

You're reporting an error for "CR – May 2020 – L3 – Q2b – Capitalization of Borrowing Costs"

FR – Nov 2023 – L2 – Q2a – Financial Reporting Standards and Their Applications

Calculate the maximum amount of borrowing costs that could potentially be capitalised in accordance with IAS 23 for Banda Ltd.

You're reporting an error for "FR – Nov 2023 – L2 – Q2a – Financial Reporting Standards and Their Applications"

CR – May 2020 – L3 – Q2b – Capitalization of Borrowing Costs

Required: Determine the maximum amount that could potentially be capitalized as borrowing costs during the period (assuming an asset was being financed using all available finance).

You're reporting an error for "CR – May 2020 – L3 – Q2b – Capitalization of Borrowing Costs"

FR – Nov 2023 – L2 – Q2a – Financial Reporting Standards and Their Applications

Calculate the maximum amount of borrowing costs that could potentially be capitalised in accordance with IAS 23 for Banda Ltd.

You're reporting an error for "FR – Nov 2023 – L2 – Q2a – Financial Reporting Standards and Their Applications"

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Required:
Determine the maximum amount that could potentially be capitalized as borrowing costs during the period (assuming an asset was being financed using all available finance).

Required:
Determine the maximum amount that could potentially be capitalized as borrowing costs during the period (assuming an asset was being financed using all available finance).