On Jan. 1, 2020, the entity started the preparation of its building construction. On the same date, it specifically acquired a loan for the construction. The entity spent P3,000,000 on Jan. 1, 2020 and P5,000,000 on Mar. 31, 2021. The loan has a principal amount of P10,000,000, interest of 5% due every Jan. 1, maturity date of Jan. 1, 2023, net proceeds of P9,732,700, and an effective interest rate of 6%. While not yet paid out for the construction, the amount borrowed was temporarily invested. Investment income for the two years totaled P480,000. 5. How much is the total capitalizable cost as of Dec. 31, 2021?
On Jan. 1, 2020, the entity started the preparation of its building construction. On the same date, it specifically acquired a loan for the construction. The entity spent P3,000,000 on Jan. 1, 2020 and P5,000,000 on Mar. 31, 2021. The loan has a principal amount of P10,000,000, interest of 5% due every Jan. 1, maturity date of Jan. 1, 2023, net proceeds of P9,732,700, and an effective interest rate of 6%. While not yet paid out for the construction, the amount borrowed was temporarily invested. Investment income for the two years totaled P480,000. 5. How much is the total capitalizable cost as of Dec. 31, 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On Jan. 1, 2020, the entity started the preparation of its building
construction. On the same date, it specifically acquired a loan for
the construction.
The entity spent P3,000,000 on Jan. 1, 2020 and P5,000,000 on Mar.
31, 2021.
The loan has a principal amount of P10,000,000, interest of 5% due
every Jan. 1, maturity date of Jan. 1, 2023, net proceeds of
P9,732,700, and an effective interest rate of 6%. While not yet paid
out for the construction, the amount borrowed was temporarily
invested. Investment income for the two years totaled P480,000.
5. How much is the total capitalizable cost as of Dec. 31, 2021?
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