5. KLM had the following loans in place at the beginning and end of 20X1: 31 December 20X1 1 January 20X1 Description Bank loan, 6% p.a. Bank loan, 8% p.a. 130,000 50,000 200,000 130,000 50,000 Debenture stock, 5.5% p.a. The bank loan at 6% p.a. was taken in July 20X1 to finance the

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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5. KLM had the following loans in place at the beginning and
end of 20X1:
31 December 20X1
1 January 20X1
Description
Bank loan, 6% p.a.
Bank loan, 8% p.a.
Debenture stock, 5.5% p.a.
130,000
50,000
200,000
130,000
50,000
The bank loan at 6% p.a. was taken in July 20X1 to finance the
construction of a new production hall (construction began on
1 March 20X1).
The bank loan at 8% p.a. and debenture stock were taken for
general purposes, one of which is to finance the construction
of a new machinery.
KLM used P60,000 for the construction of the machinery on 1
February 20X1 and P25,000 on 1 September 20X1.
Requirement: What borrowing cost should be capitalized for the
new machinery?
Adapted)
Transcribed Image Text:5. KLM had the following loans in place at the beginning and end of 20X1: 31 December 20X1 1 January 20X1 Description Bank loan, 6% p.a. Bank loan, 8% p.a. Debenture stock, 5.5% p.a. 130,000 50,000 200,000 130,000 50,000 The bank loan at 6% p.a. was taken in July 20X1 to finance the construction of a new production hall (construction began on 1 March 20X1). The bank loan at 8% p.a. and debenture stock were taken for general purposes, one of which is to finance the construction of a new machinery. KLM used P60,000 for the construction of the machinery on 1 February 20X1 and P25,000 on 1 September 20X1. Requirement: What borrowing cost should be capitalized for the new machinery? Adapted)
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