Reference no: EM132851043
Question - In order to curb costs, Company A started construction on a new manufacturing plant in July 1, 2020. The following costs were incurred:
July 01, 2020 2,400,000
October 01, 2020 2,100,000
January 01, 2021 2,500,000
April 01, 2021 2,400,000
On the commencement of construction, the company secured a 3-year P2,000,000 loan bearing interest of 11%, the proceeds of which will be used to cover necessary expenses for the project.
The only other borrowing outstanding throughout the construction are corporate bonds with a face value of P4,500,000 which pays coupon payments of P540,000 annually.
The company was also able to raise P10,000,000 in equity issuances before the project.
Construction was finished in September 30, 2021.
Required -
1. Determine the capitalizable borrowing costs in 2020?
2. Determine the carrying amount of the manufacturing plant as of completion of construction.
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