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Calculate the amount of interest expense to be capitalised

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Question - Company engages in the development of a hotel. It is expected to take 7 years to complete, at a cost of £130,000. On 1st Jan 2015, the company decided to take out a bank loan for £100,000 at an interest rate of 6% to specifically finance this hotel development. Expenditure incurred on the development was as follows:

1st January 2015 £40,000

1st March 2015 £25,000

1st October 2015 £15,000

Required - Calculate the amount of interest expense to be capitalised.

Reference no: EM133155755

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