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International Building (Pty) Ltd decided to build a warehouse with estimated cost of $1,200,370. The money that the company had was $900,000 and have to

International Building (Pty) Ltd decided to build a warehouse with estimated cost of $1,200,370. The money that the company had was $900,000 and have to borrow the rest of the money from the bank that will be paid over two years at the interest rate of 7%. Then the money is received six months before the construction begins and will be invested at the rate of 5% per annum.

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How would the borrowing be recognized in the financial statements (show the calculations)?

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