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Ouyang Inc., which uses IFRS, borrows capital to finance the construction of its plant. The loan has the following information.
Load date: 1 Jan, 2013
Loan amount: $100,000
Annual Interest rate: 10%
Loan term: 5 years
Payment method: annual payment of interest only
The construction takes two years, during which time Ouyang Inc. earned $5,000 by temporarily investing the loan proceeds. How much of the interest can be capitalized related to the construction in its balance sheet?
A. 5,000
B. 10,000
C. 15,000
D. 20,000
D. 25,000

Sagot :

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