Answered: How much borrowing cost shall be…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 9PA: Mohammed LLC is a growing consulting firm. The following transactions take place during the current...

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LIME Co. decided to construct a building to expand its operations. The entity decided to obtain a 5-year loan from MAROON Bank for P10,000,000 at 12% on December 31, 2019, to finance the construction of the building. The construction started on January 2, 2020, and the building was completed on December 31 of the same year. Payments were made as follows: January 2 – P1,500,000; April 1 – P2,000,000; June 1 – P2,100,000; October 1 – P1,700,000; December 1 – P2,200,000. How much borrowing cost shall be capitalized?

A. ₱ 1,200,000

B. ₱ 580,000

C. ₱ 1,100,000

D. ₱ 1,140,000

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