Blerghe started constructing a building for its own use on January 1, 2020. Blergh provided the following information related to the construction: Outstanding loans of the Company at January 1, 2020: Interest Rate Amount of loan Interest Cost 5% P10,000,000 P 500,000 10% 20,000,000 2,000,000 Total P30,000,000 P2,500,000 Construction expenditures: July 1, 2020 7,000,000 November 31,2020 3,000,000 December 31, 2020 1,000,000 The amount of borrowing cost that should be charged to profit or loss for the period is?
Blerghe started constructing a building for its own use on January 1, 2020. Blergh provided the following information related to the construction: Outstanding loans of the Company at January 1, 2020: Interest Rate Amount of loan Interest Cost 5% P10,000,000 P 500,000 10% 20,000,000 2,000,000 Total P30,000,000 P2,500,000 Construction expenditures: July 1, 2020 7,000,000 November 31,2020 3,000,000 December 31, 2020 1,000,000 The amount of borrowing cost that should be charged to profit or loss for the period is?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Blerghe started constructing a building for its own use on January 1, 2020. Blergh provided the following information related to the construction:
Outstanding loans of the Company at January 1, 2020:
|
Interest Rate |
Amount of loan |
Interest Cost |
|
5% |
P10,000,000 |
P 500,000 |
|
10% |
20,000,000 |
2,000,000 |
|
Total |
P30,000,000 |
P2,500,000 |
Construction expenditures:
|
July 1, 2020 |
7,000,000 |
|
November 31,2020 |
3,000,000 |
|
December 31, 2020 |
1,000,000 |
The amount of borrowing cost that should be charged to profit or loss for the period is?
a. 340,142
b. 2,208,450
c. 312,375
d. 2,187,625
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