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How is interest capatilazation accounting treatment made on fixed assets as at 1st April 2017?

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How is interest capatilazation accounting treatment made on fixed assets as at 1st April 2017?

Company A is a service providing industry in aviation sector. Financial year for company A runs from 1 April to 31 March.

In 1st Jan 2017 A entered into a contract with aircraft manufacturing company B for the purchase of one Airplane costing $200million, out of this 40 million need to be paid on 15 Jan for starting manufacturing of Aircraft and the remaining $160 million on delivery date 30 June 2017.

On the other side Company A entered into annual 8% loan agreement with financial institution F for the same amount of $200 million.

A has paid advance of $40 million burrowing from F as per loan agreement to B on 15 Jan 2017 and Airplane is under construction.

Assume today is 1st of April,
what will be the treatment for the interest of $20 million on financial statement?

October 10th 2017 AN ACCA USER 8,620 Points

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