The following two situations involve the capitalization of borrowing costs.

Situation I: On January 1, 2022, Columbia Outfitters signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of R$4,000,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2022, to finance the construction cost, Columbia borrowed R$4,000,000 payable in 10 annual installments of R$400,000, plus interest at the rate of 10%. During 2022, Columbia made deposit and progress payments totaling R$1,500,000 under the contract. The excess borrowed funds were invested in short-term securities, from which Columbia realized investment income of R$50,000. 

Instructions

What amount should Columbia report as capitalized borrowing cost at December 31, 2022?

Situation II: During 2022, Evander SA constructed and manufactured certain assets and incurred the following borrowing costs in connection with those activities.

 ................................................................................................ Borrowing Costs Incurred
Warehouse constructed for Evander’s own use ...................................... R$30,000
Special-order machine for sale to unrelated customer, produced
according to customer’s specifications ........................................................... 9,000
Inventories routinely manufactured, produced on a repetitive
basis .................................................................................................................... 8,000

All of these assets required an extended period of time for completion.

Instructions

Assuming the effect of borrowing cost capitalization is material, what is the total amount of borrowing cost to be capitalized?