Use the following information for the next two questions: On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: Principal 12% bank loan (1.5 years) ₱ 1,000,000 10% bank loan (3-year) 8,000,000 Expenditures made on the qualifying asset were as follows: Jan. 1 ₱ 5,000,000 March 1 4,000,000 August 31 3,000,000 December 1 2,000,000 Construction was completed on December 31, 20x1. How much borrowing costs are capitalized to the cost of the constructed qualifying asset? 1,045,000 c. 1,026,667 971,111 d. 920,000 How much is the cost of the qualifying asset on initial recognition? 13,010,000 c. 14,920,000 15,045,000 d. 14,971,111
Use the following information for the next two questions: On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: Principal 12% bank loan (1.5 years) ₱ 1,000,000 10% bank loan (3-year) 8,000,000 Expenditures made on the qualifying asset were as follows: Jan. 1 ₱ 5,000,000 March 1 4,000,000 August 31 3,000,000 December 1 2,000,000 Construction was completed on December 31, 20x1. How much borrowing costs are capitalized to the cost of the constructed qualifying asset? 1,045,000 c. 1,026,667 971,111 d. 920,000 How much is the cost of the qualifying asset on initial recognition? 13,010,000 c. 14,920,000 15,045,000 d. 14,971,111
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 34P
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Use the following information for the next two questions:
On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset:
Principal
12% bank loan (1.5 years) ₱ 1,000,000
10% bank loan (3-year) 8,000,000
Expenditures made on the qualifying asset were as follows:
Jan. 1 ₱ 5,000,000
March 1 4,000,000
August 31 3,000,000
December 1 2,000,000
Construction was completed on December 31, 20x1.
How much borrowing costs are capitalized to the cost of the constructed qualifying asset?
1,045,000 c. 1,026,667
971,111 d. 920,000
How much is the cost of the qualifying asset on initial recognition?
13,010,000 c. 14,920,000
15,045,000 d. 14,971,111
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