FIN611 Assignment No 2 Solution Autumn 2021-Advance Finanical Accounting
Question: 1
XYZ Limited has planned the construction of a plant for production at another site. The construction will be required a huge amount. This may also require importing some machinery as well. The following information has been extracted from the balance sheet of XYZ Limited as on 31st December 2020
Outstanding Loans:
Loan A @ 19% p.a Rs. 1,500,000
Loan B @ 15% p.a Rs. 3,500,000
Loan C @ 21% p.a Rs. 2,500,000
Loan A and Loan C were taken at the start of the financial Year 2020, the Loan B was taken on March 31st, 2020. The import duty of Rs. 100,000 also paid after deducting the government subsidy given of Rs.100,000 on import duty. Other than these expenses, XYZ Company Limited has incurred the following expenditure during the year on the plant under construction:
February 01, 2020 500,000
April 30,2020 700,000
September 30, 2020 1,300,000
Required
Determine the capitalization rate and total cost be capitalized on the construction of the plant
till the date.
