Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company A started work on the construction of its headquarters at the beginning of January 1, 2020. In order to finance expenses related to this

image text in transcribed

Company A started work on the construction of its headquarters at the beginning of January 1, 2020. In order to finance expenses related to this project, the company took out a construction loan with Bank B with details as follows: Non-interest bearing note with the principal payable at the end of 2 years Implicit interest rate was determined to be 9%. Construction expenses in 2020 amounted to P4,500,000, while expenses in 2021 amounted to P4,000,000 until its completion in the end of September. In May 1, 2020, a portion of the loan was briefly put by the company in a 6-month time deposit with Bank C, accruing interest of P120,000. The note was paid upon maturity. Use a PV factor of 4 decimal points. Round final answers to nearest peso. Determine: 1. Amount of capitalizable borrowing costs in 2020 2. Balance of the Building account in the statement of financial position as of December 31, 2021, assuming no depreciation is taken on the first year of use. Company A started work on the construction of its headquarters at the beginning of January 1, 2020. In order to finance expenses related to this project, the company took out a construction loan with Bank B with details as follows: Non-interest bearing note with the principal payable at the end of 2 years Implicit interest rate was determined to be 9%. Construction expenses in 2020 amounted to P4,500,000, while expenses in 2021 amounted to P4,000,000 until its completion in the end of September. In May 1, 2020, a portion of the loan was briefly put by the company in a 6-month time deposit with Bank C, accruing interest of P120,000. The note was paid upon maturity. Use a PV factor of 4 decimal points. Round final answers to nearest peso. Determine: 1. Amount of capitalizable borrowing costs in 2020 2. Balance of the Building account in the statement of financial position as of December 31, 2021, assuming no depreciation is taken on the first year of use

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Security And Auditing Of Smart Devices

Authors: Sajay Rai, Philip Chukwuma, Richard Cozart

1st Edition

0367567997, 978-0367567996

More Books

Students also viewed these Accounting questions

Question

Are my points each supported by at least two subpoints?

Answered: 1 week ago