On January 1, 2023, Cake Company had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: 12% bank loan (1.5 years)-P1,000,000 10% bank loan (3-year)-P8,000,000 Expenditures made on the qualifying asset were as follows: Jan. 1-P5,000,000 March 1-P4,000,000 August 31-P3,000,000 December 1-P2,000,000 Construction was completed
On January 1, 2023, Cake Company had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: 12% bank loan (1.5 years)-P1,000,000 10% bank loan (3-year)-P8,000,000 Expenditures made on the qualifying asset were as follows: Jan. 1-P5,000,000 March 1-P4,000,000 August 31-P3,000,000 December 1-P2,000,000 Construction was completed
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 34P
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On January 1, 2023, Cake Company had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset:
12% bank loan (1.5 years)-P1,000,000
10% bank loan (3-year)-P8,000,000
Expenditures made on the qualifying asset were as follows:
Jan. 1-P5,000,000
March 1-P4,000,000
August 31-P3,000,000
December 1-P2,000,000
Construction was completed on December 31, 2023.
How much is the cost of the qualifying asset on initial recognition?
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