As of Jan. 1, 2020, ABC Corporation is constructing a new facility located in a community that has little livelihood sources. The entity received the land from the government on the condition that it hires 90% of its workers from the community throughout a 5-year period. The land is valued at P10,000,000. The construction of the building was partially financed by the entity and also the government. Information regarding the facility construction, government grant and funding sources can be seen in the attached image. By the end of 2020, construction is substantially completed. Date Amount Spent Jan. 1,2020 P 4,000,000 March 31,2020 5,000,000 June 30, 2020 8,000,000 Borrowing Interest Rate Principal Amount Specific Borrowing-Government 8% P 2,000,000 Genaral Borrowing A 9% 12,000,000 Genral Borrowing B 10% 4,000,000 All borrowings were outstanding throughout the year. Interest payments are due every Jan.1 1. How much is the capitalizable borrowing cost? Continuing from item 1, the estimated wages and other benefits to be given to those hired in the community are shown in the table. 2. How much would be the total grant income for the years 2020 to 2022? Year Amount 2021 P 2,000,000 2022 3,000,000 2023 6,000,000 2024 7,000,000 2025 7,000,000 Total P 2,000,000
As of Jan. 1, 2020, ABC Corporation is constructing a new facility located in a community that has little livelihood sources. The entity received the land from the government on the condition that it hires 90% of its workers from the community throughout a 5-year period. The land is valued at P10,000,000. The construction of the building was partially financed by the entity and also the government. Information regarding the facility construction, government grant and funding sources can be seen in the attached image. By the end of 2020, construction is substantially completed. Date Amount Spent Jan. 1,2020 P 4,000,000 March 31,2020 5,000,000 June 30, 2020 8,000,000 Borrowing Interest Rate Principal Amount Specific Borrowing-Government 8% P 2,000,000 Genaral Borrowing A 9% 12,000,000 Genral Borrowing B 10% 4,000,000 All borrowings were outstanding throughout the year. Interest payments are due every Jan.1 1. How much is the capitalizable borrowing cost? Continuing from item 1, the estimated wages and other benefits to be given to those hired in the community are shown in the table. 2. How much would be the total grant income for the years 2020 to 2022? Year Amount 2021 P 2,000,000 2022 3,000,000 2023 6,000,000 2024 7,000,000 2025 7,000,000 Total P 2,000,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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As of Jan. 1, 2020, ABC Corporation is constructing a new facility located in a community that has little livelihood sources. The entity received the land from the government on the condition that it hires 90% of its workers from the community throughout a 5-year period. The land is valued at P10,000,000. The construction of the building was partially financed by the entity and also the government. Information regarding the facility construction, government grant and funding sources can be seen in the attached image. By the end of 2020, construction is substantially completed.
| Date | Amount Spent |
| Jan. 1,2020 | P 4,000,000 |
| March 31,2020 | 5,000,000 |
| June 30, 2020 | 8,000,000 |
| Borrowing | Interest Rate | Principal Amount |
| Specific Borrowing-Government | 8% | P 2,000,000 |
| Genaral Borrowing A | 9% | 12,000,000 |
| Genral Borrowing B | 10% | 4,000,000 |
All borrowings were outstanding throughout the year. Interest payments are due every Jan.1
1. How much is the capitalizable borrowing cost?
Continuing from item 1, the estimated wages and other benefits to be given to those hired in the community are shown in the table.
2. How much would be the total grant income for the years 2020 to 2022?
| Year | Amount |
| 2021 | P 2,000,000 |
| 2022 | 3,000,000 |
| 2023 | 6,000,000 |
| 2024 | 7,000,000 |
| 2025 | 7,000,000 |
| Total | P 2,000,000 |
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