The Danica Company self constructed an asset for its own use. Construction started on January 1, 2021 and the asset was completed on October 31, 2021. Costs incurred during the period of construction were as follows: January 1-P400,000 April 1-P500,000 August 1-P480,000 October 1-P180,000 At the beginning of the year, the company obtained a two-year, 18% loan of P500,000, specifically to finance the asset construction. In addition to the specific borrowing, prior to the construction, Danica Company had a general borrowing amounting to P600,000 with interest of 15%
The Danica Company self constructed an asset for its own use. Construction started on January 1, 2021 and the asset was completed on October 31, 2021. Costs incurred during the period of construction were as follows: January 1-P400,000 April 1-P500,000 August 1-P480,000 October 1-P180,000 At the beginning of the year, the company obtained a two-year, 18% loan of P500,000, specifically to finance the asset construction. In addition to the specific borrowing, prior to the construction, Danica Company had a general borrowing amounting to P600,000 with interest of 15%
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 9MC
Related questions
Question
The Danica Company self constructed an asset for its own use. Construction started on January 1, 2021 and the asset was completed on October 31, 2021. Costs incurred during the period of construction were as follows:
January 1-P400,000
April 1-P500,000
August 1-P480,000
October 1-P180,000
At the beginning of the year, the company obtained a two-year, 18% loan of P500,000, specifically to finance the asset construction.
In addition to the specific borrowing, prior to the construction, Danica Company had a general borrowing amounting to P600,000 with interest of 15% and a five-year term that was used in part in the self construction.
What is the total cost of the self constructed asset?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT