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What is amount of the impairment loss on income statement

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Reference no: EM132532183

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Q1) Zesta Corporation borrows capital from a local bank to finance the construction of its manufacturing plant. The loan has the following conditions:

Borrowing date 1 January 2019

Amount borrowed $1000 million

Annual interest rate 13 %

Term of the loan 6 years

Payment method: Annual payment of interest only. Principal amortization is due at the end of the loan term.

The construction of the plant takes four years, during which time Zesta earned $75 million by temporarily investing the loan proceeds. What would be the amount of interest related to the plant construction (in million $) that can be capitalized in Zesta's balance sheet?

Q2) An analyst is studying the impairment of the manufacturing equipment of Fixet Corporation that follows IFRS. He gathers the following information about the equipment:

Fair value $100,000

Costs to sell $50,000

Value in use $90,000

Net carrying amount $120,000

What is the amount of the impairment loss on Fixet's income statement related to its manufacturing equipment?

Reference no: EM132532183

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