were P2,000,00C on January 1, P1,000,000 on March 31 andThe construction began on January 1, 2020 and was completedon December 31, 2020. The expenditures on the constructionProblem 25-2 (IFRS)On January 1, 2020, Shangrila Company borrowed P2,000,000at an interest rate of 12% specifically for the construction of anew building.The actual interest cost on this specific borrowing was P240,000but interest of P10,000 was earned from the temporaryinvestment of the borrowing proceeds.Shangrila Company also had the following other loans in 2020which were borrowed for general purposes but the proceedswere used in part for the construction of the building.'PrincipalInterest10% bank loan3,000,0005,000,000300,000600,00012% long term loanP3,000,000 on September 30.Required:Compute the cost of the new building.

Concept of borrowing Cost Accounting for fixed assets

On January 1, 2020, Shangrila Company borrowed P2, at an interest rate of 12% specifically for the construct new building. The actual interest cost on this specific borrowing was F but interest of P10,000 was earned from the tem investment of the borrowing proceeds. Shangrila Company also had the following other loans which were borrowed for general purposes but the were used in part for the construction of the huildin

On January 1, 2020, Shangrila Company borrowed P2, at an interest rate of 12% specifically for the construct new building. The actual interest cost on this specific borrowing was F but interest of P10,000 was earned from the tem investment of the borrowing proceeds. Shangrila Company also had the following other loans which were borrowed for general purposes but the were used in part for the construction of the huildin

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Question

were P2,000,00C on January 1, P1,000,000 on March 31 and
The construction began on January 1, 2020 and was completed
on December 31, 2020. The expenditures on the construction
Problem 25-2 (IFRS)
On January 1, 2020, Shangrila Company borrowed P2,000,000
at an interest rate of 12% specifically for the construction of a
new building.
The actual interest cost on this specific borrowing was P240,000
but interest of P10,000 was earned from the temporary
investment of the borrowing proceeds.
Shangrila Company also had the following other loans in 2020
which were borrowed for general purposes but the proceeds
were used in part for the construction of the building.
'Principal
Interest
10% bank loan
3,000,000
5,000,000
300,000
600,000
12% long term loan
P3,000,000 on September 30.
Required:
Compute the cost of the new building.

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