please help me, that what is the journal entries(if any) and calculation of this

Question

please help me, that what is the journal entries(if any) and calculation of this problem going to be?

below is Balance sheet and income statement that provided with question.

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ATTN's Notes: During Year 4 ATTN hired a construction company to build a new office building. The construction project was started at the beginning of fact, the company was able to begin moving furniture into the new office on December 30, Year 4. The company carefully followed U.S. GAAP procedures to capitalize the avoidable interest on the building After construction, ATTN decided that the building had no salvage value and would last for 15 years March and was substantially finished by the end of the year. In With a possible transition from U.S. GAAP to IFRS looming, ATTN's management team feels that this is the perfect opportunity to see what the change in GAAP will do to their financial statements. They have asked the acounting team to recalculate the capitalized interest (and any transactions based on that capitalization) following IFRS principles. Using the infomation below, determine the journal entry that would be necessary if ATTN were to switch from the U.S. GAAP method of capitalizing interest to the IFRS method at the end of Year5 NOTE: While I want you to update the FSs for this adjustment, it would not affect taxes since itis only a whatif entry Payments to the construction company Date Amount $401,531 $73,006 $146,011 $109,508 $730,056 6-2 7-16 Principal Interest Rate Outstanding debt, Year 4 Loans Payable Notes Payable Construction Note Payable $640,400 $851,732 $365,028 2 3.50% 5.00%

Explanation / Answer

Calculation and journal entry as per IAS 23

Weigted average borrowing cost=($640400 X 6.25%)+ ($851732 X 3.5%) +($365028 X 5%)/($640400+$851732+$365028) 4.74 Borrowing cost to be capitalized=($ 401531 X 4.74% X 10/12) + ($ 73006 X 4.74% X 9/12) + ($ 146011 X 4.74% X 7/12) + ($ 109508 X 4.74% X 5.5/12) 24872.1 The above amount of interest is to be capitalized in the cost of Building Journal entry Date Particulars Dr($) Cr($) 12/31/Year5 Building A/c Dr 24872.1 To Bank 24872.1 (Being interest paid to bank capitalized in building a/c

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