Reference no: EM133025527
Question - On October 1, 2018, Street Fighter Corporation began construction of a building to be used as its office headquarters. The building was completed on May 31, 2020.
Expenditures on the project were as follows:
October 3, 2018 P3,750,000
November 30, 2018 4,500,000
March 1, 2019 6,000,000
June 30, 2019 4,500,000
October 31, 2019 2,250,000
January 1, 2020 3,750,000
March 31, 2020 4,500,000
On October 3, 2018, Street Fighter obtained a P7,500,000 construction loan with a 12% interest rate. The loan was outstanding all of 2019 and 2020. The company's other interest-bearing debts included a long-term note of P37,500,000 with an 11% interest rate, and a mortgage of P22.5 million on another building with an interest rate of 9%. Both debts were outstanding during all of 2019 and 2020. The company's fiscal year-end is September 30.
The management of Street Fighter Corporation that the building has a useful life of 25 years with no residual value.
Note: Round off the capitalization rate as: XX.XX%. Round off amounts to the nearest peso.
Based on the information above, answer the following questions:
-For financial reporting purposes, determine the interest capitalized to property and equipment that qualified as borrowing costs for the years ended September 30, 2019 and 2020.
-For financial reporting purposes, determine the average interest capitalization rate used for the years ended September 30, 2019 and 2020.
-For financial reporting purposes, determine the financing costs, net of capitalized interest, for the years ended September 30, 2019 and 2020.
-In the rollforward as at and for the years ended September 30, 2019 and 2020, determine the amount to be presented under Buildings and improvements.
-In the rollforward as at and for the years ended September 30, 2019 and 2020, determine the amount to be presented under Property under construction.
-How much is the depreciation expense related to the building for the years ended September 30, 2019 and 2020?
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