Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

CR – May 2019 – L3 – Q2c – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

This question requires an explanation of the accounting treatment of government grants relating to capital expenditure under IAS 20.

Question

IAS 20: Accounting for Government Grants and Disclosure of Government Assistance sets out the requirements for recognizing as income any grants received from government agencies, together with any repayments of such grants.

Required:
Detail the requirements of IAS 20 with respect to government grants to aid capital expenditure. (3 marks)

Answer

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Tags: Capital Expenditure, Government Grants, IAS 20
Level: Level 3

Topic: Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)
Series: MAY 2019

CR – May 2016 – L3 – Q1b – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

Calculate borrowing costs to be capitalized for a warehouse construction project, considering specific loans and general borrowings.

Question

Nanniama Ltd is constructing a warehouse that will take about 18 months to complete. It began construction on 1st January 2014. The following payments were made during 2014:

GH¢’000 31st January 200 31st March 450 30th June 100 31st October 200 30th November 250

The first payment on 31st January was funded from the entity’s pool of debt. However, the entity succeeded in raising a medium-term loan for an amount of GH¢800,000 on 31st March, 2014, with simple interest of 9 percent per annum, calculated and payable monthly in arrears. These funds were specifically used for this construction. Excess funds were temporarily invested at 6 percent per annum monthly in arrears and payable in cash. The pool of debt was again used to an amount of GH¢200,000 for the payment on 30th November, which could not be funded from the medium-term loan. The construction project was temporarily halted for 3 weeks in May when substantial technical and administrative work was carried out.

Nanniama Ltd adopted the accounting policy of capitalizing borrowing costs. The following amounts of debt were outstanding at the balance sheet date, 31st December 2014:

GH¢’000 Medium-term loan (see description above) 800 Bank overdraft 1,200 (The weighted average amount outstanding during the year was GH¢750,000 and total interest charged by the bank amounted to GH¢33,800 for the year) A 10%, 7-year note dated 31st October 2018 with simple interest payable annually at 31st December 9,000

Required: Calculate the borrowing costs to be capitalized (10 marks)

Answer

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Tags: Borrowing Costs, Capitalization, Construction, IAS 23, Interest
Level: Level 3

Topic: Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)
Series: MAY 2016

CR – May 2019 – L3 – Q2c – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

This question requires an explanation of the accounting treatment of government grants relating to capital expenditure under IAS 20.

Question

Required:
Detail the requirements of IAS 20 with respect to government grants to aid capital expenditure. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Expenditure, Government Grants, IAS 20
Level: Level 3

Topic: Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)
Series: MAY 2019

CR – May 2016 – L3 – Q1b – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

Calculate borrowing costs to be capitalized for a warehouse construction project, considering specific loans and general borrowings.

Question

Nanniama Ltd is constructing a warehouse that will take about 18 months to complete. It began construction on 1st January 2014. The following payments were made during 2014:

GH¢’000 31st January 200 31st March 450 30th June 100 31st October 200 30th November 250

Nanniama Ltd adopted the accounting policy of capitalizing borrowing costs. The following amounts of debt were outstanding at the balance sheet date, 31st December 2014:

Required: Calculate the borrowing costs to be capitalized (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Borrowing Costs, Capitalization, Construction, IAS 23, Interest
Level: Level 3

Topic: Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)
Series: MAY 2016

Topic: Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

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CR – May 2019 – L3 – Q2c – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

This question requires an explanation of the accounting treatment of government grants relating to capital expenditure under IAS 20.

CR – May 2016 – L3 – Q1b – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

Calculate borrowing costs to be capitalized for a warehouse construction project, considering specific loans and general borrowings.

CR – May 2019 – L3 – Q2c – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

This question requires an explanation of the accounting treatment of government grants relating to capital expenditure under IAS 20.

CR – May 2016 – L3 – Q1b – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

Calculate borrowing costs to be capitalized for a warehouse construction project, considering specific loans and general borrowings.

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Topic: Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

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CR – May 2019 – L3 – Q2c – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

This question requires an explanation of the accounting treatment of government grants relating to capital expenditure under IAS 20.

You're reporting an error for "CR – May 2019 – L3 – Q2c – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)"

CR – May 2016 – L3 – Q1b – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

Calculate borrowing costs to be capitalized for a warehouse construction project, considering specific loans and general borrowings.

You're reporting an error for "CR – May 2016 – L3 – Q1b – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)"

CR – May 2019 – L3 – Q2c – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

This question requires an explanation of the accounting treatment of government grants relating to capital expenditure under IAS 20.

You're reporting an error for "CR – May 2019 – L3 – Q2c – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)"

CR – May 2016 – L3 – Q1b – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)

Calculate borrowing costs to be capitalized for a warehouse construction project, considering specific loans and general borrowings.

You're reporting an error for "CR – May 2016 – L3 – Q1b – Non-current assets: sundry standards (IAS 16, IAS 23, IAS 20 and IAS 40)"

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