Landry draws a loan of 3,600,000 on 1 January at 5 % a year. Expenditure, borrowing costs and preparation activities are all in place only 4 months later, on 1 May. The year ends on 31 December and no funds are temporarily invested. Calculate the interest eligible for capitalisation for the year and the interest recognised as an expense.
- Loan drawn on 1 January
- 3,600,000
- Annual interest rate
- 5 %
- Time before capitalisation begins
- 4