FTG & CO. an accounting and auditing firm was engaged by Zest Airlines Philippines to audit the company for reporting year ended December 31, 2020. You were assigned by FTG to plan the audit, and based on your experience of the environment, your team will focus on property, plant, and equipment material risks that might arise. Based on your examination and test of record you traced the following transactions: On January 1, 2020, Zest Airlines contracted with LIPAD Aircraft to construct an aircraft to Zest’s specifications at a cost ofP20,000,000. During 2020, Zest paid LIPADP4,000,000 on January 1, and anotherP2,500,000 on September 30. On the same day, January 1, Zest borrowed P3,600,000 at 13% to partially finance the construction, an obligation still outstanding at the end of 2020. The remaining amount paid to LIPAD was financed from available working capital. Zest has approximatelyP16,000,000 of additional debt outstanding at an average interest cost of 12%. Required: What is the total capitalized cost of the aircraft under construction at the end of 2020?
FTG & CO. an accounting and auditing firm was engaged by Zest Airlines Philippines to audit the company for reporting year ended December 31, 2020. You were assigned by FTG to plan the audit, and based on your experience of the environment, your team will focus on property, plant, and equipment material risks that might arise.
Based on your examination and test of record you traced the following transactions:
On January 1, 2020, Zest Airlines contracted with LIPAD Aircraft to construct an aircraft to Zest’s specifications at a cost ofP20,000,000. During 2020, Zest paid LIPADP4,000,000 on January 1, and anotherP2,500,000 on September 30.
On the same day, January 1, Zest borrowed P3,600,000 at 13% to partially finance the construction, an obligation still outstanding at the end of 2020.
The remaining amount paid to LIPAD was financed from available
Required:
What is the total capitalized cost of the aircraft under construction at the end of 2020?
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