How muc capitalizable borrowing cost for omnipresent co

Reference no: EM132817680

On January 1, 20x1, OMNIPRESENT PRESENT EVERYWHERE EVERYTIME Co. contracted for the construction of a building for ?80,000,000 on a land that it had previously purchased. The building was completed on December 20x1. The following payments were made to the contractor:

Payment date Amount

January 1, 20x1 ? 8,000,000

March 31, 20x1 24,000,000

September 30, 20x1 40,000,000

December 31, 20x1 8,000,000

The following represents the borrowings of OMNIPRESENT Co. as of December 31, 20x1.

10%, ?28,000,000, 4-year note dated January 1, 20x1 with simple interest payable annually, specifically borrowed to finance the construction project. Interest income earned on the temporary investment of the proceeds is ?480,000.
12.5%, ?40,000,000, 10-year note dated January 1, 20x1 with interest payable annually
10%, ?60,000,000, 10-year note dated December 31, 19x9 with interest payable annually

Problem 1: How much is the capitalizable borrowing cost?

a. 13,320,000

b. 3,200,000

c. 2,867,343

d. 0

Reference no: EM132817680

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