On 1 January 2019 Nacho plc had in place $500,000 of 6.0% pa loan
finance and $800,000 of 4.7% pa loan finance. Neither loan was taken out for a specific purpose. On 1 February 2019 the company began to construct a new office building, which was funded by this existing loan finance. The building was correctly assessed as a qualifying asset, was completed and available for use on 31 October 2019, and has an estimated total useful life of 50 years. The company moved its administrative function into this building on 31 December 2019. The accountant included the interest payable for the whole year on the total loan finance as part of the cost of the office building of $650,000 within property, plant and equipment. He did not recognise any depreciation on this building in the year ended 31 December 2019 because the staff did not move to the new building until the last day of the year.
Required: Explain the required IFRS financial reporting treatment of the issue above in the financial statements of the company. Show all relevant calculations and set out the required adjustments in the form of journal entries
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