The Sérignan group finances a plant with the general borrowings of the parent (8,000,000, costs for the year: 400,000) and those of a subsidiary (4,000,000, costs for the year: 320,000), outstanding all year. Group judgement (case data): pooling the borrowings is appropriate for computing the rate. The weighted average expenditure on the plant is 2,500,000. Calculate the group's capitalisation rate and the costs eligible for capitalisation.
- Parent borrowings
- 8,000,000
- Parent costs
- 400,000
- Subsidiary borrowings
- 4,000,000
- Subsidiary costs
- 320,000
- Weighted average expenditure on the plant
- 2,500,000