On January 1 of the current year, Positive Entity borrowed P1,600,000 at an interest of 10% specifically for the construction of a new building. The actual borrowing cost on this loan is P160,000 but the interest of P20,000 was earned from the temporary investment of the proceeds prior to their disbursement. The entity also had the following other loans in the current year which were borrowed for general purpose, but the proceeds were used in part for the construction of the building. 10% short-term note, 1,200,000 - 60,000 12% long-term note, 1,600,000 - 192,000 The construction of the building started on January 1 and was completed on December 31 of the current year. Expenditures on the construction were made as follows: January- 500,000; April 1 - 1,000,000; May 1 - 1,000,000; September 1 - 1,000,000; December 31 - 500,000. What is the cost of the new building?
2. On January 1 of the current year, Positive Entity borrowed P1,600,000 at an interest of 10% specifically for the construction of a new building. The actual borrowing cost on this loan is P160,000 but the interest of P20,000 was earned from the temporary investment of the proceeds prior to their disbursement. The entity also had the following other loans in the current year which were borrowed for general purpose, but the proceeds were used in part for the construction of the building.
10% short-term note, 1,200,000 - 60,000
12% long-term note, 1,600,000 - 192,000
The construction of the building started on January 1 and was completed on December 31 of the current year. Expenditures on the construction were made as follows: January- 500,000; April 1 - 1,000,000; May 1 - 1,000,000; September 1 - 1,000,000; December 31 - 500,000. What is the cost of the new building?
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