uh Company commenced construction of a new plant on February 1, 2019. The cost of P18,000,000 was paid in full to the contractor on February 1, 2019 and was funded from existing general borrowings.

The construction was completed on September 30, 2019. The borrowings outstanding during the current year comprised:

Bank A - 6%P8,000,000

Bank B - 6.6%10,000,000

Bank C - 7%30,000,000

QUESTIONS:

1. What amount of borrowing cost should be capitalized?

2, What is the interest expense for the current year?