The overall cost of the machine is P1,200,370. Molemi Group has P900,000 in the bank. The useful life of the machine is estimated to be 10 years and the policy is depreciated using diminishing balance at 10%.

Let's say Molemi Group chooses to construct an office and shop with the money they have, which would cost the same as the machine above, and borrows the remainder from the bank at 7% interest over two years. The money is invested at 5% per year six months before construction starts. How would it be shown in the first year's financial statements? (10 marks)