IAS 23 : Borrowing cost - Assignment

Question

On November 01, 2001 Jamal Nasir & Company contracted Wardah Construction Company to
have a building constructed for Rs. 3 millions. Jamal Nasir & Company made the following
payments to the construction company during 2002.

January 1 March 1 May 1 December 31 Total

Rs. 420,000 Rs. 600,000 Rs. 1,080,000 Rs. 900,000 Rs. 3,000,000

Construction was completed and the building was ready for occupancy on December 31, 2002.
Jamal Nasir & Company had the following debt outstanding at December 31, 2002:

Specific Construction Debt

i) 15%, 3-year loan to finance purchase of land and construction of the building, dated
December 31, 2001, with interest payable annually on December 31 – Rs. 1.5 million.

Other Debts
ii) 10%, 5-year loan payable, dated December 31, 199, with interest payable annually on
December 31 – Rs. 1.1 million.
iii) 12%, 10-year bonds issued on December 31, 1997, with interest payable annually on
December 31 – Rs. 1.2 million.

Surplus funds were planned to be invested @ 5% in a saving account.

Required:
Keeping in view the requirement of IAS 23,
Prepare journal entries for the year ended 31 December 2002