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Question · The capitalisation rate

Perrin is building a workshop financed by its general borrowings. The weighted average expenditure for the workshop in the year is 1,750,000 and the capitalisation rate is 6.5 %. Case convention: the borrowing costs incurred in the period exceed the amount calculated and are payable at the end of the year. Record the entry for the borrowing costs capitalised.

Weighted average expenditure
1,750,000
Capitalisation rate
6.5 %
Your answer
  1. Line 1

    Account Asset under construction (workshop)

  2. Line 2

    Account Interest payable

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