General borrowings capitalisation rate file

Context

Hélios Matériaux SA (fictitious entity) builds in 20X5 two qualifying assets: a kiln, financed by a specific loan of 1,500,000 EUR and by an equipment grant of 300,000 EUR, with an interruption of two months, and a warehouse, financed by the general borrowings. The file takes the two assets through to the financial statements of 20X5 and 20X6 (cumulative effects), with the documents, the judgements, the open points and the review. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Capitalisation rate file

Purpose of the workpaper

For an asset financed by general borrowings, list the time-weighted expenditure on the asset (product expenditure × fraction of the period, supplied by the file: the engine does not compute weighted averages), the total borrowing costs and the weighted average of the borrowings, then enter the capitalisation rate (costs ÷ weighted average) and check it. Compute the eligible costs, apply the cap at the costs incurred and prepare the entries and the note.

Questions of the file covered by this workpaper

• Compute the weighted average expenditure on the warehouse.
• Compute the capitalisation rate of the general borrowings.
• Compute the eligible costs of the warehouse.
• Apply the cap at the borrowing costs incurred.
• What information is missing to adopt the weighted average of the general borrowings?
• Record the borrowing costs, the grant, the transfer, the depreciation and the release.

• MemoEngagement letterOpen
• ContractSpecific loan of the kilnOpen
• MinutesSite log of the kilnOpen
• ScheduleExpenditure, grant and recoverable amount of the kilnOpen
• ScheduleGeneral borrowings and expenditure on the warehouseOpen
• ExtractReply from the technical departmentOpen
• MemoInsurance contract of the kilnOpen