Homework Help is Here – Start Your Trial Now!
Business
Finance
It is assumed that there was no fluctuation in interest rates or which some are qualifying assets. The loan has not been used capital, inventories and property, plant and equipment of proceeds have been used to finance a combination of working A bank loan of P9 million with an interest rate of 11%. The an individual qualifying asset for the purpose of obtaining The loan is therefore a general borrowing. borrowings through the period. Requirement: Compute for the borrowing costs eligible for capitalization using the avoidable interest method. (Adapted – GT -"Capitalisation of borrowing costs: From theory to practice" (April 2009)

It is assumed that there was no fluctuation in interest rates or which some are qualifying assets. The loan has not been used capital, inventories and property, plant and equipment of proceeds have been used to finance a combination of working A bank loan of P9 million with an interest rate of 11%. The an individual qualifying asset for the purpose of obtaining The loan is therefore a general borrowing. borrowings through the period. Requirement: Compute for the borrowing costs eligible for capitalization using the avoidable interest method. (Adapted – GT -"Capitalisation of borrowing costs: From theory to practice" (April 2009)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question
capital, inventories and property, plant and equipment of proceeds have been used to finance a combination of working A bank loan of P9 million with an interest rate of 11%. The which some are qualifying assets. The loan has not been . or Tor the purpose of obtaining an individual qualifying ase The loan is therefore a general borrowing. It is assumed that there was no fluctuation in interest rates or borrowings through the period. Requirement: Compute for the borrowing costs eligible for capitalization using the avoidable interest method. (Adapted – GT -"Capitalisation of borrowing costs: From theory to practice" (April 2009)
Transcribed Image Text:capital, inventories and property, plant and equipment of proceeds have been used to finance a combination of working A bank loan of P9 million with an interest rate of 11%. The which some are qualifying assets. The loan has not been . or Tor the purpose of obtaining an individual qualifying ase The loan is therefore a general borrowing. It is assumed that there was no fluctuation in interest rates or borrowings through the period. Requirement: Compute for the borrowing costs eligible for capitalization using the avoidable interest method. (Adapted – GT -"Capitalisation of borrowing costs: From theory to practice" (April 2009)
4. An entity has entered into an agreement to construct a qualifying asset for P10 million. This agreement was entered into on 1 January 2009, which is the beginning of the entity's reporting period. It is expected that the qualifying asset will be ready for use at the end of the reporting period (31 December 2009). The following were the expenditures during the period: Date Expenditures 6,000,000 1/1/09 8/1/09 3,000,000 12/31/09 1,000,000 10,000,000 Totals The entity's financing: The entity's total borrowings are P15 million made up of the following: P6 million loan with an interest rate of 9%. This loan was taken out entirely to acquire the qualifying asset and is therefore a specific borrowing. This specific borrowing relates to the first payment to the contractor.
Transcribed Image Text:4. An entity has entered into an agreement to construct a qualifying asset for P10 million. This agreement was entered into on 1 January 2009, which is the beginning of the entity's reporting period. It is expected that the qualifying asset will be ready for use at the end of the reporting period (31 December 2009). The following were the expenditures during the period: Date Expenditures 6,000,000 1/1/09 8/1/09 3,000,000 12/31/09 1,000,000 10,000,000 Totals The entity's financing: The entity's total borrowings are P15 million made up of the following: P6 million loan with an interest rate of 9%. This loan was taken out entirely to acquire the qualifying asset and is therefore a specific borrowing. This specific borrowing relates to the first payment to the contractor.
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Borrowing costs
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS