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Calculate the carrying amount of the storage facility

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Case: Buffalo Ltd began the construction of a new stadium on 1 January 2021. The stadium is a qualifying asset in terms of IAS 23. The stadium was still under construction at year-end on 31 December 2021.

Payments made relating to the construction were made evenly during 2021 as follows:

The construction was financed by GENERAL borrowings within Buffalo Ltd. General loans outstanding at any one time during 2021 averaged R20 000 000. The interest expense incurred on these loans during 2021 was R2 600 000. The financier compounds interest every 4 months.

Question 1. Calculate the borrowing costs to be capitalised during the year ending 31 December 2021.

Question 2. Calculate the carrying amount of the storage facility on 31 December 2021.

Question 3. Show all interest-related journal entries for the year ending 31 December 2021.

Reference no: EM133265574

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