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Calculate amount would be capitalised as a non-current asset

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Reference no: EM132498607

On 1 January 2018, USG entered into a contract with a property developer to have a manufacturing facility built at a cost of €15 million. To finance the cost of the contract, USG entered into a loan agreement with a bank to borrow an amount equal to the cost of the contract at an annual interest rate of 6% on 1 January 2018. The facility was expected to be completed by 31st March 2019, but it was delayed due to strike by workers during the period 1 November 2018 to February 2019. USG invested available funds from 1 June 2018 to September 2018 and earned interest income amounting €24,000. The manufacturing facility was completed and put to use on 31st May 2019 and the loan was repaid on 30th June 2019. The expected useful life of the facility is 50 years.

Requirement

Question i. Calculate the amount that would be capitalised as a non-current asset.

Question ii. Prepare the financial statement extracts for 31st December 2018 and 31st December 2019.

Reference no: EM132498607

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